Marketing Management: Marketing Strategy Comparison - Apple's iPhone versus RIM's BlackBerry

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How does one define whether a firm operating in the mobile phone industry is more or less successful? Some argue that success should be measured using the metrics defined by the titans of industry. Warren Buffet, one of the most successful investors of our time uses “Return On Invested Capital” (ROIC) as the key measure of enterprise success. However, using this measure Apple is only slightly (1.5%) more successful than Research in Motion (RIM) table 1 refers.

However, for the purposes of this paper we have defined success as a firm's ability to strategically position its self as a high-end premium brand, with a reputation as the market leader in quality, customer satisfaction and steadily growing market share. Using these metrics, we propose that clearly Apple is the more successful of the two.../

The results from a 30 question quantitative survey with over 120+ respondents, and 2 qualitative focus groups were used to analyze perceptions, needs and wants of business users in California and beyond. Results were presented in the paper and a 20 minute presentation, alongside recommendations for both brands.

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Marketing Management: Marketing Strategy Comparison - Apple's iPhone versus RIM's BlackBerry

  1. 1. APPLE CRUSHES, BLACKBERRY BLEEDS… …IT’S BUSINESS AS USUAL ;-)     Marketing Management 205 - June 1, 2012 team3z Alexandra Brooks, Steve Chaky, Ruben Pedroza, and Sharon Singleton 1    
  2. 2. The modern history of mobile phones dates back to before World War II. The US Military usedmobile cellular radios for communication during World War II. Commercial use of cell phonesbegan in 1946 in St. Louis. AT&T was the first company to offer mobile telephone service andsince that time, the cell phone industry has grown into a $152 billion industry dominated byfierce competition; there are several key cell phone makers including, Apple, Samsung, HTC,Research in Motion (RIM), LG, and Nokia. The market has become segmented into two maingroups, smart phones and feature phones; Apple and RIM compete exclusively in the smartphone segment.SuccessHow does one define whether firm in this industry is more or less successful? Some argue thatsuccess should be measured using the metrics defined by the titans of industry. Warren Buffet,one of the most successful investors of our time uses “Return On Invested Capital” (ROIC) asthe key measure of enterprise success. Using this measure Apple is only slightly (1.5%) moresuccessful than Research in Motion (RIM) table 1 refers. Company   Apple   RIM   5 Year Average ROIC   29.5%   28.0%  Table 1 ROIC comparison Apple and RIM However, for the purposes of this paper we have defined success as a firms ability tostrategically position its self as a high-end premium brand, with a reputation as the market leaderin quality, customer satisfaction and steadily growing market share. Using these metrics, wepropose that clearly Apple is the more successful of the two. Since the introduction of the iPhone in 2007, Apple has been able to effectively marketthe product’s main differentials as an all-in-one communicational device, revolutionary widetouch screen, large storage space, customizable software, enhanced user experience and Apple- 2    
  3. 3. made. Apple’s marketing strategy is the following has focused on pricing, a hybrid distributionchannel, unique selling proposition (innovation, customization, personalization, connectivity,and music, photos and video storage.) The firm created an exclusive feel for the product throughits communication strategy and plan, while limiting the launch of the device to one model peryear (with 3 memory capacities) and selling them in limited locations: Apple Online Store,Apple Store and limited service provider outlets. The premium price point for the device, whichretails for $699-899 off-contract and $199-399 on- is based on its technological offering and ahuge Apple fan base. Apple does not provide discounts to any retailers. Released as the firstcommercially available smartphone in 2003 and now well into maturity within its lifecycleBlackBerry RIM’s current marketing strategy offers a host of different models, launching since2007 around 37 models. BlackBerry is retailed through many outlets including: RIM stores,design dealer stores, service carrier stores, as well as ‘Big Box’ retailers like Walmart. Subjectto severe competition and downward pricing pressure, RIM retails its phones for a moreaffordable $399-549 off contract/ $0-299 on contract. Until 2011 the firm’s launch publicity wasrelatively low key with little hoopla, recently the firm has begun to issue press releases andlaunch and customer introduction events in developing markets such as Indonesia. In terms of customer satisfaction Apple’s IPhone leads the market. For the last twoyears, it has ranked number one in customer satisfaction, receiving 5/5 in all areas of customersatisfaction. It received top ratings in performance, ease of use, physical design, and features. Over the past 5 years, Apple’s strategy has allowed it to steadily gain market share. Figure 1 3    
  4. 4. shows how Apples market share has risen steadily since iPhone’s introduction in 2007. Havingpeaked in 2009, it is apparent that RIM’s market share has markedly declined from its zenith. Figure 1 Cell Phone Market Share Industry / Environmental Analysis Smartphones were once the domain of the business user, accounting for approximately 100% smart phone market. Within the last five years this has changed,as consumer and business needs have converged. With the price of smartphone services fallingmore consumers began to purchase smart phones. This changed the industry because consumersdid not care for features that were once considered critical for business. Now features like amarketplace with access to a large library of productivity apps and a large touchscreen areconsidered important; the features of the phones we now driven by the larger consumer marketthat is hungry for gaming, entertainment, and mobile web browsing. The smart phone industry was originally focused at providing business users with a toolthat enabled them to stay connected anywhere. Companies like RIM developed specializedsoftware and hardware that addressed the needs of the business user (BlackBerry EnterpriseServer). As the first in market with little or no competition, RIM became the market leader insmart phones. However, as the cost of smart phone service fell, the lower cost of service enabledconsumers to purchase smart phones; today 40% of iPhones sold today are used for business use.This has led to a shift in the business smart phone industry, it became more consumer driven;consumers were demanding ease of use and more applications to personally assist them. Theneed for more applications caused a second shift: the development of an application marketplace. 4    
  5. 5. The application marketplace has allowed smart phone users to customize their deviceswith 3rd party software. Apple was one of the first companies to launch its App Store and one ofthe first cell phone makers to provide support for 3rd party developers. The iPhone now has thelargest library of 3rd party software of any phone. Consequently App Store and its large libraryof software are now one of the key features of the iPhone. The App Store and the availability of a vast library of applications began a third shift inthe industry; adoption of the iPhone by business users. When the iPhone was introduced in 2007was initially marketed as a phone for gadget techies. The availability of the App Store andApple’s support for third-party developers, has allowed developers to customize the phone to beused for more than entertainment purposes; users could be productive. Business users coulddownload apps that permitted the phone to view, print, edit, and create office documents. Moreimportantly, these applications could be added anywhere, at any time. The smartphone industry has evolved, to the point where business users and consumersdemands have converged. All users now demand phones that are easy to use, constantlyconnected and provide a marketplace where applications can be purchase and added to the phoneon the fly.Technology AnalysisThe cell phone industry has evolved from an environment where cell phones were merely mobiletelephones permitting users to place calls to multi-use devices (cameras, mini PCs, personalassistants). This change is being driven by a change within the industry from a business userfocus to a consumer focus. In the recent past, many of smartphone features were driven by the business user needs.The need to perform tasks such as checking e-mail or texting, lead to the integration of a physical 5    
  6. 6. keyboard. The need to be connected to the home office lead to companies like RIM developingsupport for Microsoft’s Exchange server via its BlackBerry Enterprise Server. RIM marketedand positioned itself as the business users cell phone of choice. Boasting the best support forExchange server and the industry’s best on phone keyboard. In 2007 Apple introduced its iPhone as a phone for consumer gadget lovers and changedthe industry. It was the beginning of the consumer driven smart phone design. Google followedApple with the Nexus One (Android) phone and now Android and iPhone smart phones accountfor over 75% of the smart phone market. Although both these products were initially focused atthe consumer market, they have been migrated over 4 to 5 generations (approximately 3 to 4years) to work in the corporate environment. Apple’s pioneering strategy of designing consumer-focused phone that could be used for business resulted in changes to the design of the phone andtechnology integrated into it. Previously important business features such as physical keyboardsare gone, now replaced by touchscreen keyboards. A touchscreen permits the user to do morewith the phone, transforming it into a full-screen multimedia entertainment device. Users canplay games, watch movies, listen to music, or read a book. Apple has continued to push thedevelopment of the consumer driven phone design through its use of the App Store. Apple’s App Store was originally conceived as a marketplace for 3rd party software. Itwas initially focused on consumers, but now includes many applications for business users.Business users can use the App store to customize their phone into a Swiss Army knife for thebusiness user. One example is the development of high-resolution cameras. Initially developedfor taking pictures, developers have created apps that allow business users to perform tasks suchas video conferencing on the go and the scanning of documents and business cards. TheiPhone’s ability to use WIFI has allowed 3rd party developers to develop apps that allow the 6    
  7. 7. phone to print documents and scan full color documents right to the phones. Apple’s support for3rd party developers has allowed developers to build new features into the IPhone Apple did notdevelop itself.Customer analysisIn order to direct our analysis we selected a target segment identified as business users of mobiledevice technology. The age demographic that we looked at spanned the usual work age of thepopulation 18 – 65 years. In order to inform the direction of our research we conducted a “quickand dirty” review of comments appear on Twitter. We tabulated the comments for #BlackBerryand #iPhone search terms ranking them as wants, needs, observations, and complaints. This qualitative data guided the design of the focus group. Focus groups were made up ofa mix of 7 participants selected for their behavior (loyal, switching behavior and first time use.)The sessions, run by a facilitator and recorded by two observers, lasted 40 minutes and includedan icebreaker. Participants were encouraged to respond to three main question areas focusing onproduct likes, dislikes and unmet needs/improvements. Using the observations made by the focus group as guidance, the group created ananonymous online self-administered questionnaire with URL access. The survey was marketedvia the group’s own personal and business networks, including dissemination via Facebook,Twitter, and a CraigsList.com listing. The group also incentivized full participation by offeringfree entry into a $25 Starbucks gift card draw. Data collection took place between May 11-15yielding 118 responses. The group based its analysis on 108 completed surveys. The screeningquestion asked respondents to indicate if they had ever owned an iPhone or BlackBerry. Othervariables were measured using closed and open ended questions. Data analysis consisted of oneway tabulations of every variable, listing frequency and percentage of the dependent variable, 7    
  8. 8. and 2x2 cross tabulations between the screening question and other independent variables. Aprintout of the questionnaire and cross-tabulations are included in appendix A.Segment behaviorThe survey asked six background segmentation questions including ownership of iPhone ofBlackBerry models, occupation, gender, age, education, and income. It also asked fourbehavioral segmentation questions including amount of use, percentage of spent using, reasonsfor using, and how users had acquired their smart phone (via personal resources or supplied bybusiness.) Upon answering the segmentation questions, the respondents were asked to sharetheir level of satisfaction and what features they liked best and least. The next section sought tounderstand what features were important to users when selecting a smartphone. The next sectionwas made available only to those users who were current or past iPhone or BlackBerry users toascertain what attributes their decision to purchase their phones in the past. Finally respondentswere asked to specify at least one improvement to their current smartphone. The question regarding smartphone ownership indicated that 66% respondents hadeither owned or had owned an iPhone at some point, and 62% had owned, or owned aBlackBerry. In terms of the share 27% of BlackBerry users own or have owned an iPhone in thepast, whereas nearly twice as many (53%) of iPhone owners have own or have owned aBlackBerry. The gender split for iPhone revealed a slight bias towards a younger and slightlymore affluent user group, with a bias toward male ownership (60%) and BlackBerry (maleownership 52%) for both brands. However, considering the small sample size we would seek toconfirm this in further research but will disregard its effect for the purposes of this study. Basedon the volume of survey results, we selected key areas to focus our analysis on which includecustomer “likes and dislikes”, overall satisfaction, switching, and brand perception. 8    
  9. 9. Our survey measured 15 dimensions of “likes”, which influenced the purchase of thecurrent smart-phone in use and 17 dimensions of “dislikes”. We created table 2 summarizing thetop 5 customer responses side by side comparing iPhone and BlackBerry products. iPhone  Users Blackberry  Users Rank  Order Likes  (Influenced  Purchase) Dislikes Likes  (Influenced  Purchase) Dislikes Battery  l ife  i s  too  short  and  Other-­‐   Usability  and  Access  to  Apps  (54%   #  1 Battery  l ife  i s  too  short  (40%) Business  Use  (68%) Few  Apps/Screen  Freezes/Slow   each) web  connectivity  (40%  e ach) Other-­‐  Employer  i ssued/Free  BBM   #  2 Touch  Screen  (51%) Network  coverage  i s  poor  (33.33%) Camera  (20%) with  users  i n  other  countries  (32%) Brand  Perception  and  Referral   #  3 Not  durable  e nough  (20%) Usability  and  Keyboard  (28%  e ach) Styling  i s  old-­‐fashioned  (16%) (47.5%  e ach) Network  coverage  i s  poor,  Not   Hardware  and  Business  Use  (42.4%   #  4 Monthly  cost  (18.33%) Hardware  (24%) durable  e nough,  Keyboard-­‐buttons   each) too  small  (12%  e ach) Access  to  own  music  and  Camera   Other-­‐  Autocorrect/Outlook   Design  appearance  and  Antenna   #  5 Durability  (20%) (39%  e ach  ) functions  (13.33%) issues  (8%  e ach)  Table  2.  Side  by  side  comparison  of  top  likes  and  dislikes  by  smartphone We found the results revealing, as the #1 “likes” for iPhone regarding its accessibility toan extensive selection of applications was one of the #1 “dislikes” for BlackBerry users, as theirsmart phone is limited on the number of applications available for download. It is clear that thispopulation of BlackBerry owners’ purchase decisions was influenced by Business use, as 68%cited this as the #1 “likes”, which influenced the selection of their BlackBerry device. We alsothought it noteworthy that iPhone’s Brand recognition and Referral was rated more than 47% byiPhone owners as a major reason why they made their purchase. Many respondents indicatedthey decided to take the plunge to purchase their iPhone after friends recommended how easy thedevice was to use. For example, one person commented in our survey that “I chose my currentsmart phone because I had to see what all the iPhone hubbub was about” while others wrote,“Everyone seemed to enjoy the iPhone” and “The brand is popular and it had great reviews”. After understanding the iPhone and BlackBerry customers’ “likes” and “dislikes”, weturn our research to both customer segments’ overall satisfaction with their smart phone. Whenasked “How satisfied are you with your current smart phone?” 48.3% of iPhone owners were 9    
  10. 10. found to be Very Satisfied, while only 23% of BlackBerry owners responded they were VerySatisfied. In fact, the majority of BlackBerry owners reported they were Satisfied with theirdevice, interestingly though, no BlackBerry respondents reported being dissatisfied with theproduct. Table 3 below summarizes our survey findings about customer satisfaction. Based on these results, it appears that Apple’s iPhone devices are delighting customers, while RIM provides functional smart phone devices, but is not differentiating the BlackBerry brand from its largest competitor. We believe the level of customer satisfaction with the BlackBerrybrand is directly correlated to the secondary market research presented earlier which showed theBlackBerry brand continuing to lose market share to iPhone in the smart phone market. Wethought it important to take our analysis a step further to understand how these satisfactionresults may impact BlackBerry customers’ loyalty to the brand or potential desire to switch, andalso to confirm whether iPhone customers are loyal to the brand or looking for the next blockbuster device to hit the market. Our survey results showed 83.3% of iPhone owners are not thinking of switching whileonly 42.3% of BlackBerry owners are committed to their phone. Of the 13.3% of iPhone usersthat indicated “Yes” for switching, their text comments showed all but one respondent isconsidering switching to a newer version of the iPhone and not to another brand. Thisdemonstrates the strong customer loyalty of iPhone users to the brand. Of the 38.5% of 10    
  11. 11. BlackBerry owners that indicated “Yes” for switching, their text comments showed all but tworespondents were considering switching to an iPhone. This shows that overall brand loyalty toBlackBerry is low, and we believe the surveyed BlackBerry owners would possibly switchsooner if their employers offered the iPhone as an option for their company issued phone. Since value perception is primarily a combination of quality, service, and price, wewanted to learn more about how BlackBerry customers perceived the BlackBerry brand and theiPhone brand, as well as how iPhone customers perceived the iPhone brand, and the BlackBerrybrand. Using the results presented in the tables below, it is clear that BlackBerry users perceivethe BlackBerry brand as Business, Professional, Connected, Convenience, and Value. iPhoneusers also view BlackBerry as Business and Professional, but have additional perceptions aboutthe BlackBerry brand such as Dated, Low Tech, and Cheap. iPhone users view the iPhone brandas Convenience, High Tech, Entertainment, Cool, Connected, Fun, Professional, Business, andFriends. Likewise, BlackBerry users view the iPhone brand as High Tech, Entertainment, Fun,Cool, Connected, and Convenience, but fewer BlackBerry users perceive iPhone as Business orProfessional. This perception may correlate with why many companies are slow to adopt theiPhone as the standard for employer provided smart phones, however, additional research beyondthis survey would be required to make that determination.       11    
  12. 12.  Figures 2 & 3 How BlackBerry and iPhone customers perceive BlackBerry and iPhoneProduct/Service Analysis – Features including pricingThe Apple iPhone is sold globally, but has highest brand recognition and penetration in Apple’smain market of Europe and North America. Domestically, the iPhones come in 3 standard priceoptions based on hard-drive size and do not allow for memory upgrades. There is one phone thatis available that is not the latest model and Apple only distributes it in the 8GB capacity. Version/Pricing   16GB   32GB   64GB   iPhone 4s with Contract   $199.00   $299.00   $399.00   iPhone 4s w/o Contract   $649.00   $749.00   $849.00   iPhone 4 with Contract (only 8GB)   $99.00       Table 4 iPhone version and pricing  BlackBerry phones come in various models and pricing with expandable memory upgradesavailable. BlackBerry phone are available via certain network provider (ATT, Verizon, Sprint,etc.) and models vary amongst carriers. Customers have the option of buying older modelphones at a discount and through alternative distribution channels, such as Best Buy, Target, andRadioShack, table 5 demonstrates the variety of plans available at AT&T. Version/Pricing (AT&T)   Bold 9900   Curve 9360   Torch 9860   BlackBerry with Contract   $199.99   $29.99   $99.99   BlackBerry w/o Contract   $549.99   $379.99   $449.99   Version/Pricing (Verizon)   Bold 9930   Curve 9370   Torch 9850   BlackBerry with Contract   $229.00   $99.99   $179.99   BlackBerry w/o Contract   $509.99   $409.99   $459.99   Version/Pricing (Sprint)   Bold 9930   Curve 9350   Tour 9630   12    
  13. 13. BlackBerry with Contract   $199.99   $49.99   $99.99   BlackBerry w/o Contract   $499.99   $349.99   $249.99   Version/Pricing (Best Buy)   Bold 9900   Curve 9300   Torch 9810   BlackBerry with Contract   $99.99   N/A   $0.01   BlackBerry w/o Contract   $699.99   $349.99   $599.99  Table 5 BlackBerry version and pricing at AT&T stores5Ms Advertising Analysis): iPhone BlackBerry Mission iPhone advertising is centered on RIM informs, persuades, and reminds persuading and informing business customers of the functionality of its customers about the product BlackBerry products. features and functionality. Features such as “Siri” and the BlackBerry is trying to market and create “iCloud” are portrayed in a brand awareness amongst younger sophisticated, yet cool-hip generations, as seen with its “Be Bold” manner. campaign using cartoon superhero’s, of which RIM was hoping to associated with younger users. With the slogan “the best business decision you’ll ever make” the Apple iPhone is targeting both business user and the younger generations. Message The iPhone message is BlackBerry’s message is focusing around structured around informing the business user with slogans such as “Be customers about the latest Bold”, We need tools, not toys”, and “I’m functionality and features about action, not distraction”. available on the newest products. Television and radio Along with the established business user, commercials use celebrities to BlackBerry is trying to appeal to younger- endorse the product, and shape hip generations with advertisements the message around a featuring younger business entrepreneurs, sophisticated and cool-hip such as DJs and musicians, of which need product that is fun to use. professional tools to perform their work. BlackBerry is also pushing its security 13    
  14. 14. features. Media The iPhone advertising is pushed BlackBerry utilizes traditional and new through both traditional and new media to advertise its products. (including media outlets (including Facebook and Twitter.) Facebook and Twitter.) From television advertising to Much of the advertising is in conjunction internet advertising, Apple with a specific service provider or remains consistent with the distributor, such as AT&T or Best Buy. message and uses features, such as specific music in that carries across the different media. Media advertising such as TV, billboards, and Web 2.0 are all utilized by RIM and their BlackBerry products. Money iPhone is currently leading the BlackBerry is losing market share, and smartphone industry in market appears to be increasing its advertising share, however it continues to budget, with advertising expense, which increase its advertising budget. includes media, agency and promotional expenses totaling $1.1 billion, $791 million, $719 million for 2011, 2010 and 2009, respectively. Advertising expense was $933M, $691 million and $501M for 2011, 2010 & 2009, respectively. Measurement iPhone has the largest share of The BlackBerry product is quickly losing the market with a strong loyalist market share to various other smartphone following and growing number providers. Although loyalists remain, of switchers. switching is becoming a large problem for BlackBerry. Customer satisfaction appears to Many customers have dissatisfaction with high with features like the Apple the lack of creative new features and the Store providing support service, mediocre internet and app functionality, as but also enticing new sales. compared to many of the new phones, including the Droid, Nokia, and iPhone.Table 5: 5M Analysis and comparison 14    
  15. 15. Distribution/Sales force AnalysisIn researching distribution/sales force for the iPhone and BlackBerry, several service providerstores were visited, such as AT&T and Verizon. One reoccurring observation was the iPhonewas readily available and displayed in prime viewing locations in stores, while the BlackBerryphones were not. Additionally, both phones took a back sit to the Droid and Nokia phones whenit came to prime shelf space. When visiting the Verizon store, no BlackBerry products were displayed on the sales-floor. When asked about the product, the salesmen indicated they had some in the back, but theywere not that popular anymore. He also indicated that BlackBerry hadn’t released anything newand exciting in quite some time. In discussing the iPhone, the salesmen indicated that it was areally good phone and that it could provide the emailing and texting, as well as superior data. When visiting an AT&T Store, the salesmen discussed the benefits of the BlackBerryphone and indicated that it was a good phone for email and texting, but not good with the data.The key feature of the BlackBerry was the keyboard and the customer’s ability to type moreefficiently. A few of the phones were located on the sales floor, but not in the prime locations.The salesmen indicated that the iPhone was also a good email and texting phone but had a strongadvantage over BlackBerry in the data handling and functionality. When visiting Costco the salesmen stated to rsearchers, “You don’t want the BlackBerry,you should look at the Droid phone, and it does everything the BlackBerry does and more.” Hethen continued to push against a BlackBerry purchase. Even when brought back to the topic ofthe BlackBerry, the salesperson begrudgingly looked up the availability of the phone on thecomputer and indicated the BlackBerry Bold could be mailed to me with a week or two. When 15    
  16. 16. bringing up the iPhone, he once again pushed the Droid phone, and pushed that it was the bestphone on the market. Subsequent anecdotal research online indicated to us that the salesman’s enthusiasm tosell Droid over iPhone and Blackberry is related to the salesperson incentivising programs inplace – resulting in a top down push from Droid. iPhone not needing to incentivise due to itspopularity and loyalty is pulling customers towards it, whereas BlackBerry appears to be in amarketing limbo with respect to this channel.Sales Promotions iPhone sales its phone through three major networks service providers (AT&T, Sprint,Verizon) and some brick and mortar distribution. Regardless of the distribution channel, theiPhone had very formal pricing structure. Promotions are very rare and discounts are limited andcoincide with new version and releases. Verizon was offering only one discounted iPhone, theiPhone 4 (8GB), otherwise customers had to go with the iPhone 4s (16GB, 32GB, 64GB). Although Apple limits its iPhone promotions, it provides additional services, such as theApple Store and iCloud that add value to the customer. BlackBerry has a wide swath of salespromotions and is available through numerous distribution channels. In addition to the channelsthe iPhone was sold through, BlackBerry phones could be purchased through big box retailerslike Best Buy, Target, and RadioShack. Promotions are often and vary among the distributionchannel. With a confusing array of sales promotions on we would submit that this could alsoconfuse salespeople who will most probably sell customers the product with the easiest “sell”. 16    
  17. 17. Figure 4 SWOT BlackBerrySWOTs BlackBerry’s strengths are its brand, which is strong in the US, Europe and in developingmarkets worldwide including the Far East. It is associated with business and viewed as a seriousbusiness tool. It is priced as a more affordable competitor to other smart phones such as iPhoneand Android phones. The biggest weakness for BlackBerry is the consumer perception that it isa dead platform - with consumers and purchasers for corporates. Another weakness includes itsclosed operating system, which until late 2011 did not support 3rd party apps (currently 60,000are available, with 2Bn downloads to date.) Opportunities for BlackBerry include aggressivemarketing in developing countries as the lower-cost alternative to Android and iPhones phones. 17    
  18. 18. Threats for Blackberry come primarily from the iPhone and Android phones. Both of who haveconsumed, at BlackBerry’s expense, large pieces of mar÷ket share (over 75%).Figure 5 SWOT iPhoneiPhone strengths include brand, Apple is viewed as a status symbol and the iPhone is perceivedas being high tech, a market leader primarily because of its App Store (600,000 apps available,85Bn downloads), and its support from 3rd party app developers. iPhone weaknesses includeperceptions of fragility, expense, and difficult to use as a basic phone. It is also notergonomically optimized (holding of items in an unsupported position can result in “Gorillaarm”.) Opportunities include expanding the corporate market, expanding into developing worldservicing business and consumer users. Due to Apple’s size it also benefits from its clout, able to 18    
  19. 19. influence partner firms like software developers. Primary threats are that it operates in a highlycompetitive environment requiring constant innovation. Also competitors with a lower pricepoint with features mirroring many of the same functions and features of iPhone may challenge.Recommendations: Our research shows iPhone is in an enviable position of having an extremely loyal, heavyusing customer, therefore we recommend that Apple a) continue focusing its current targetpopulations and allow the popularity of iPhone to work the product into large corporations b)continue to develop new product differentiators i.e. natural language processing and interactivity,also other customization / personalization features, like those foster “identity” characteristics c)we would also recommend considering the user preferences of the next generation of users – useof social media as opposed to email, and finally d) mid-long term we would expect the deliveryof a seamless “it just works” experience – allowing the sharing of content across all Apple’smainstream products like iPhone, iPod, iPad and Macs. On the other side of the coin, the challenge facing RIM is that of retaining customers longenough to reduce “churn”. Recognizing that once a customer has switched regaining them isdifficult; the firm needs to dis-incentivize switching quickly so as to stem the flow of customersleaving. In the short term therefore we would advise tying in customers with attractive pricingand upgrade options, this would prove expensive to the firm’s bottom line but this would ‘buy’RIM time to reposition BlackBerry to its customer base in the following ways over the next 3months to 18 month time frame. We propose revisiting the brand’s product positioning,slimming down the product line up, and communicating an elegant “less is more” message. Wewould also refocus on BlackBerry’s brand image to communicate its “mastery of messagingtools” - extolling the hardware’s reliability, durability, security, and purely business tool focus – 19    
  20. 20. including BlackBerry Messenger, battery life and keyboard. We recommend that RIM drop itsattempt to compete head on with iPhone and aggressively differentiate itself as the premierserious business communications device - not an iPhone “Angry Birds” infotainment player or“surfer dude” throw away fashion accessory. It could do this with celebrity endorsement andlimited special editions with luxury brand associations (bearing in mind the aforementionedslimmed down product line-up.) Finally, considering the amount of competition in the over-saturated US market, we advise that RIM should continue to target and grow its marketpenetration in new markets outside of North America (especially developing countries such asIndonesia) where its brand is better known. 20    
  21. 21. Appendix AiPhone versus BlackBerry SurveyQ1. Dear Survey Taker,Thank you for taking part in our market research project. We estimate that this survey will takebetween 7-9 minutes to complete, and to thank you for your participation, were entering everyfully completed questionnaire into a free sweepstake for a $25 Starbucks gift card.This survey will close at 11:55pm (PT) May 15th, and the draw will take place on May 16th, thewinner will be notified by email the same day.The last section of the survey will provide you with more details on how to be entered into thedrawing. On the next page is our informed consent form, please read this through and submityour agreement before starting this survey.Thanks again, and Good LuckQ2. Electronic Consent FormQ3. Have you ever owned an iPhone smartphone?Q4. Have you ever owned an BlackBerry smartphone?Q5. Please select your current brand of Smartphone:Q6. Please select your network provider:Q7. How long have you had your current phone (in months)?Q8. Is there another brand or model you are thinking of switching to:Q9. In 2-3 sentences, please explain why you chose your current smartphone.Q10. How satisfied are you with your current smart phone?Q11. What features of your smartphone, if any, do you like LEAST ? (Please select all thatapply)Q12. How important are the following features to you when selecting a new mobile device /Smartphone ?Q13. What do you primarily use your device for?Q14. Which of the following iPhone models have you owned in the past and/or currently own?Q15. What or Who influenced your decision to select an iPhone?Q16. Select the attributes that you more closely associate with iPhoneQ17. Which of the following Blackberry models have you owned in the past and/or currentlyown?Q18. What influenced your decision to select a Blackberry?Q19. Select the attributes that you more closely associate with BlackberryQ20. Please specify at least one improvement you would like to see in your current smartphone:(For example, higher resolution camera, better memory, music player, better/more fashionablerange of accessories, video calling, multiple tasking apps open as windows, games, etc.);Q21. On a typical week many hours do you spend using your smartphone?(For example: checking email, texting, phone calls, gaming, Internet searches, using Apps, etc.)Q22. What percentage of your time is spent on the following activities23. Was your device provided by your employer? 21    
  22. 22. Q24. What area primarily best describes your occupation? Please choose one:Q25. Please select your age from the ranges shown below.Q26. Gender:Q27. How much education have you completed?Q28. Please indicate your annual income:Original survey can be accessed at www.Qualtrics.com 22    

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