2. Blackberry Limited, formally known as Research in Motion.
Understanding the economics of business and associated
business risks.
How business react to demand is essential.
3. According to Forbes (2010)
“We expect Apple’s market share to overtake that of RIM by
2011, and for Apple and RIM to have 11% and 8% market share.
In 2013 RIM was stated as having 1.5% of the market share
and recently it was stated that
“BlackBerry’s global smartphone market share is now barely a
blip on the radar.”(BGR 2013).
What Economics and managerial decisions occurred from
2010 to present that caused RIM to loose so much ground?
4. Understanding demand shift is very important.
Being able to respond is even more critical to remain
profitable.
Blackberry’s consumers.
The ease of information.
This set the stage.
5. Demand (Continue)
Stock price and consumer confidence.
What sets price?
Blackberry’s stock prices falls.
8. Substitution is a significant threat to smartphone manufacturers.
What characterizes the market?
Technological innovation.
The Evidence.
9. Cross-elasticity is also high for smartphones.
The primary competitor
Choosing a smartphone.
10. Managerial economics is very important especially in the world
of mobile devices.
Blackberry’s consumer and enterprise marketing apparently fought
over strategy.
The executives did not realize how the shift in demand to
smartphones would affect their business.
The introduction of the iPhone would create a strong demand for
fun over function which Blackberry had done very well.
11. Identifying Risks and how they relate to demand is essential, which resulted
in Blackberry’s initial issues with remaining relevant in the marketplace. This
became apparent for Blackberry with the introduction of smart phones,
specifically the iPhone. As a result Blackberry is no longer a consideration
in this market space.
Editor's Notes
Prior to June 2011, most people were very familiar with. A global leader in telecommunication wireless innovation, A company that appeared to understand the market process very well, and who was the creator of the once very popular cell phone, the Blackberry.
are key responsibilities of firms.
Which resulted in Blackberry’s initial issues with remaining relevant in the marketplace from the introduction of smart phones, specifically the iPhone.
Market had shifted quickly, which set the stage for creating challenges with understanding the client, market demand and an effective corporate culture.
“Changes in the non-price determinants result in changes in demand, (i.e. shifts in the demand curve)”, Keats 2012 7th edition states.
Had changed from once selling to corporate consumers quickly changed into selling to retail consumers.
The market place was shifting as more and more people were accustomed to getting information very quickly and easily.
and how you get is more and more of a cultural phenomenon in the United States shaping consumers behavior.
for creating challenges with understanding the client, demand and an effective corporate culture which is discussed below.
If stock price is related to consumer confidence then this is a clear indicator of what the consumer thought of Blackberry. If one correlates confidence to demand then one can conclude that demand was dropping significantly.
This dynamic of supply and demand is the most important for firms to understand about stock prices.
While investors may want to assign a value to a stock, such as declining EPS or revenue, it is the market and the give and take between supply and demand that sets the price.
While consumer confidence was dropping the demand for the blackberry cell phone also shifted.
Firms having the ability to address this is essential to stay relevant and in the market. For this reason having the right team to understand Managerial Economics is key.
With some exceptions, smartphones from most manufacturers at any given time have relative feature parity in many respects, making substitution relatively easy from the consumer’s perspective.
The market is characterized by constant product introductions, quickly evolving technology and designs, short product life cycles, aggressive pricing, rapid imitation of product and technological advancements, a high price sensitivity of consumers.
Although the technological innovation is rapid in the smartphone market, any edge a particular firm might obtain, whether it be technological or industrial, is diminished by rapid imitation.
Although no specific numbers are available, the evidence points to relatively high self-elasticity of demand. Smartphone manufacturers compete heavily on price and small changes in price often result in increases in sales.
A consumer who does not have a need for the additional features of a smartphone, but just requires basic functionality (voice calls, texting, etc.) will choose a feature phone.
outside of the smartphone market is the feature phone. The primary reason that consumers chose to go with a feature phone instead of a smartphone is the price of the phone.
requires both a larger upfront cost, and higher ongoing cost for a data plan. Feature phone buyers do not have the ongoing cost of a data plan. Feature phone buyers also may not see the added functionality of a smartphone as being valuable enough, when they already own dedicated devices that provide the functionality (cameras, GPS devices, etc.)
- According to Josh Bernoff (2013) his article on marketing strategy for the mobile mind shift states that “The Mobile Mind Shift is the expectation that any desired information or service is available, on any appropriate device, at a person’s moment of need”.
This refers to how the mobile market is shifting and the need for quick information on a device that can do it all is very important.
Companies like Forrester Research, measures the changes in consumer attitudes toward different mobile devices.
Blackberry is aware of the changes in consumer attitudes as the want for more affordable cellular devices no one wants to pay $600 for a cell phone anymore. Consumers are now demanding cheaper phones that still meet the needs of problem solving.
Analytics helps marketers increase their knowledge of the customer, enabling improved personalization of marketing to help build trust with the customer, which is important to the success of mobile marketing. It also assists in breaking though marketing barriers with location-based, hyper-personal marketing that is best able to reach the customer and be impactful
