Set: 1 H – A Team
MKTG 1102
David Wan
October 20, 2009
Rosa Lin, Bo Zhang, Kevin Hui, Livleen Rai, Oscar Wong, Christina Santorelli
1
Problem Identification
Have you ever seen a blackberry commercial on TV or an advertisement on billboards?
Key Findings
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RIM spent $379,644 on advertising their blackberries, whereas Apple spent $100
million in advertising for the iPhone
Can buy iPhones online from the apple store, but cannot buy blackberries from the
blackberry website (US)
RIM has connections in China (worlds largest telecommunications user) with China
Telecom (smallest market but offers services to business people) and China Mobile
(China’s largest telecommunications provider, but only offer a few 2G phones, while
Apple uses China Unicom, said to be inefficient and a poor decision maker
Ultra-fast-growing worldwide smartphone market – 13% share in 2008, with 155 million
out of 1.19 billion mobile phones sold. IDC predicts 20% share for 2013 with 280 million
out of 1.4 billion mobile phones sold
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Apple had more success with their iPhone due to better advertising than Blackberry
iPhone
No term: $299.99 (US) – 3GB memory
No term: $680.00 (Can) – 16GB memory
Mostly made in China
Costs $175 to make
Largest App Store on the market
65,000 apps for iPhone
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2
Blackberry
No term: $349.99 (US) BB Curve 8900 – 256MB
memory
No term: $599.99 (Can) – 256MB memory
Mostly made and assembled in Canada
Costs $203 to make
Has an App World, but who has ever heard of it?
2,000 apps for blackberry
By being mostly made in China, the iPhone can be sold at a lower price since the cost
to make it is relatively low
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Blackberry is well on to its way to take over Nokia as the world’s largest smart-phone
producer
iPhone targets a wider general population, whereas the blackberry targets mostly the
business world, as stated in their mission statements
“Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented
the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the
industry in innovation with its award-winning computers, OS X operating system and iLife and
professional applications. Apple is also spearheading the digital media revolution with its iPod
portable music and video players and iTunes online store, and has entered the mobile phone
market with its revolutionary iPhone. Apple is committed to bringing the best personal
computing experience to students, educators, creative professionals and consumers around the
world through its innovative hardware, software and Internet offerings.”
“Research In Motion Limited (RIM) is a leading designer, manufacturer and marketer of
innovative wireless solutions for the worldwide mobile communications market. Through the
development of integrated hardware, software and services that support multiple wireless
network standards, RIM provides platforms and solutions for seamless access to time-sensitive
information including email, phone, text messaging (SMS and MMS), Internet and intranetbased applications.
RIM technology also enables a broad array of third party developers and manufacturers to
enhance their products and services with wireless connectivity to data. The award-winning
products, services and embedded technologies offered by RIM are used by thousands of
organizations around the world and include the BlackBerry® wireless platform, the BlackBerry
Wireless Handheld, software development tools, radio-modems and other hardware and
software.”
3
SWOT Analysis
Strengths:
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RIM centers on radio technology and mobile communication
A strong global brand
Large business customer base – sold 65 million phones to its 28.5 million subscribers
Most popular portable communication device
First wireless smart phone on the market
RIM listed in Forbes magazine as the fastest growing company in the world
Weaknesses:
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Lack of application software, offers 2,000 while Apple offers 65,000 applications
Poor marketing strategy
Prices too high
Applications developed by 3rd party company
Only focused on phones not other products
Produced in Canada, meaning higher fixed costs to make Blackberries
Opportunities:
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Brand Loyalty
Increase market share in Canada. (Nokia holds majority, Apple 2nd, RIM 3rd)
Nokia is a licensing partner with RIM
World’s 2nd largest maker of smart phones
Threats:
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4
Apple has more room to expand through other service providers in Canada
Lawsuits (NTP lawsuit, copyright infringement of NTP patents)
Customer’s taste shifts to another product
Extreme competition from Apple, HTC, Palm, Microsoft, Google, Motorola, Dell, Acer
and more
Competitive Analysis
Research in Motion’s Blackberry faces competition from all sides. Just to name a few are
Apple’s iPhone, Google’s Android, Palm’s Pre, HTC’s Dream and Motorola’s Q.
The main competitor of the Blackberry is Apple’s iPhone. The iPhone offers rich applications
and it is extremely user friendly. It offers 3G services, video shooting, video editing, efficient
messaging system, and a huge application database. Moreover the database is constantly
updated with new user made applications. The iPhone also comes with an application store
uploaded. You can activate the store and continue to download the apps wirelessly through 3G
services.
Another competitor is Google’s Android. It is not a phone, but it is an open sourced software
that can be installed on cell phones. Currently, it can be installed on at least 18 phone models
worldwide. It offers an application store called, Android Market, it also offers native support
for multi-touch, but is permanently disabled to avoid Apple copyright infringement.
Palm’s Pre is another competitor to the Blackberry. It offers a full QWERTY keyboard like the
one offered on the Blackberry. It also has an accelerometer installed much like the iPhone,
which helps changing the orientation of the display from portrait to landscape or vice versa.
The Palm Pre also offers Wi-fi Support like the iPhone. Moreover, the Palm Pre contains around
7.4GB of internal memory.
HTC’s Dream is another competitor. It is a 3G-enabled phone and it utilizes Google’s Android. It
also contains a full QWERTY keyboard just like the Blackberry.
Motorola’s Q is also an alternative to Research in Motion’s Blackberry. It utilizes Window’s
Smartphone OS, which offers much of the core Microsoft programs currently installed on
Windows Vista. It also contains a QWERTY keyboard. It has around 64MB of internal memory
but is not 3G capable.
To conclude, Research in Motion’s Blackberry faces competition from Apple’s iPhone, Google’s
Android, Palm Pre, HTC’s Dream and Motorola’s Q. Many of them offer their own specialties
such as a QWERTY keyboard and internal storage, but a majority of them do not match the
Blackberry.
5
Target Market
Blackberry has a variety of target markets. They have reached out to the business professionals
as well as the younger generation. It offers fast and easy internet access for business
professionals on the go. It also provides the younger generation with camera applications,
games and face book access.
These particular phones are used by a wide age range and a fair split between men and
women. People who usually use a blackberry are in the upper income bracket, such as
business professionals that use it for their jobs.
Blackberry is used throughout the world among many different ethnicities and languages.
Blackberry was geared towards the business professional class, which therefore it was meant
for people with high education and a suitable income. Today anyone can get a hold of a
Blackberry which is why this target market rages from young to older. Blackberry has changed
their products substantially to suit their target market.
Now that many different kinds of people and generations are using them they have to make
these products satisfy all needs. There are many different Blackberries which are geared toward
specific groups. Blackberries target market has grown a lot over the last couple of years. It has
branched out not only to the business class but also many of the younger generation.
This device is being used all over the world by many different people. The variety of
applications and features on these devices has generated numerous amounts of popularity in
the cellular phone business.
6
Alternative Strategy 1
Form a contract with only companies who produce products at other countries for a cheaper
price such as China or Japan. By doing so Blackberry will be able to reduce cost of making their
products which will allow them the option to either maintain the current selling price or
decrease the selling price to compete with other companies such as Apple yet still obtains profit
from sales. Excess money could go to advertisement, commercials, or ads.
Pros
- Cheaper cost
- Higher percent margin on products
- Excess cash could be placed at other areas
Cons
- Confiscating current contract to change to another workshop
- Possible rejection
- Export and Import all the time
Alternative Strategy 2
Having a higher budget for commercials, and ads. Although Blackberry does in fact produce
new products like the Storm slider for example, it is not recognized by the public because the
commercials are either horribly produced or shown at rarely known channels. This is a
worthwhile investment to put commercials about their products at Family channel or channels
that younger generations primarily watch for, because they are the hugest consumers in the
market.
Pros
- More recognizable commercials (They actually see the product)
- More known to general public other then business people
- More commercials
Cons
- Higher advertisement cost
- Takes long time to come up with effective commercials
- Reduces budget from other areas
7
Alternative Strategy 3
Redesigning, Repackaging, Relocating their products, First of all we could barely find Blackberry
products at well known electronic shops such as Future shop compared to Apple who has their
own row of product while Blackberry products are mashed together with other companies.
Relocating their products to a more noticeable area in a store would give consumers more
options rather than the huge Apple sign sticking in their face. Repackaging, not only does the
products have to be at an easier accessible area in stores but the design also has to be more
general friendly then just targeting the business men and women. Redesigning the products to
an easier and well used design but somewhat different so that the product won’t have a too
difficult learning curve yet maintaining something fresh. All these is for the prime purpose of
attracting consumers to pay attention to their products when they are out looking for
electronics and not be limited to just famous companies like Apple.
Pros
- Better design/appearance
- Easier to locate in stores
- More user friendly
Cons
- Long time to redesign, and repackage
- Cost to redesign and repackaging
- Negotiation with stores to relocate products
8
Solution
Since the problem for Blackberry is its poor marketing practices, Research in Motion should
focus on that particular problem. Research in Motion should target more towards the
consumer market, instead of just tailoring to the business market. That way the Blackberry will
remain a strong competitor to the Apple iPhone.
For example, I conducted a survey of how many people have seen a Blackberry ad compared to
an iPhone ad. Out of the 5 people I have asked, all 5 said they have seen an iPhone ad but all 5
have said they have never seen a Blackberry ad. The survey itself, should explain why the
Blackberry isn’t so popular with the consumer market. The Blackberry does not identify itself
with consumers.
The perfect solution to Research in Motion’s problem is to produce a marketing strategy with
better ideas. Such as creating an advertisement that identifies with consumers, better
designs, and marketing their application store.
To begin, Research in Motion should begin to create a better advertising idea. Apple spends
around $486 million (2008 Q1) on advertising of all of its products, while Research in Motion
spent $337.30 (2009 Q2) on advertising. It is no surprise why no one has ever seen a Blackberry
ad. RIM should invest more money into advertising and do research on how to attract the
consumer markets. Ideas such as catchy music or linking actresses/actors with the phone or
other celebrities with a Blackberry could be potentially be more popular than the iPhone.
Research in Motion should also consider marketing their app store. Currently not many
consumers even know that Blackberry has an app store. Once RIM starts to market it, it would
attract customers and it would be an excellent marketing medium.
In my survey I also asked about the design of the Blackberry. Many say the design looks too
bulky and “professional” whereas, the iPhone looked “hip” and sleek. To solve this RIM should
design a new phone ground up that looks sleek and according to consumers wants and needs.
With the above ideas, Research in Motion could create a much better marketing medium to
compete with Apple‘s iPhone.
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Implementation Plan
1. The solution should be implemented by increasing the marketing budget to 25% of the
annual gross revenue, with emphasis targeting at the consumer market year round.
2. Expending and speeding up the targeted marketing promotion and advertising efforts
with co-branding approach, teaming up with all the frontline WSP(Wireless Service
Provider) partners around the world, such as Verizon, Sprint, AT&T, T-Mobile, Bell
Canada, TELUS, Rogers, China Telecom.
3. Fully utilizing WSP’s vast existing marketing, sales, and customer services networks, as
they have the best and unique first-hand knowledge and experience within their own
markets, to identify and satisfy the consumers’ needs and wants naturally.
4. Creating co-branding app stores by merging into WSP’s existing operations.
5. Globally Implementing specific and localized monthly promotion and advertising tactics,
by taking advantage of each region’s targeted Special Events such as Holiday, Festival,
Sport or Charity, which can only be accomplished through co-branding with the WSPs
efficiently and cost effectively, for example:
Month
January
February
March
April
May
June
July
August
September
October
November
December
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Special Events
New Year Day; Martin Luther King Jr’s Birthday (USA); Australia Day; Chinese New
Year; and other Major Sport and Charity events
Ground Hog Day (USA); Valentine’s Day; President’s Day (USA); and other Major Sport
and Charity events
St. Patrick’s Day; St. Joseph’s Day; Spring Equinox (CAN–USA); and other Major Sport
and Charity events
April Fool’s Day; Palm Sunday; Good Friday; Easter Monday; Day; Secretaries Day; and
other Major Sport and Charity events
May Day; Mother’s Day (CAN-USA);Victoria Day (CAN); Memorial Day (USA); and
other Major Sport and Charity events
Flag Day (USA); Father’s Day (CAN-USA); Summer Solstice (CAN-USA); St. John Baptist
Day (CAN, QC); and other Major Sport and Charity events
Canada Day; Independence Day (USA); Celebrations of Light (CAN, BC); Back-to-School
I; and other Major Sport and Charity events
The Assumption (Catholic-Orthodox); Ramadan; Back-to-School II; and other Major
Sport and Charity events
Labour Day (CAN-USA); Patriots Day; Fall Equinox (CAN-USA); Yom Kippur (Jewish);
Back-to-School III; and other Major Sport and Charity events
Red October; Columbus Day (USA); Thanksgiving Day (CAN); Labour Day (NZ);
Halloween; and other Major Sport and Charity events
All Saints’ Day; Election Day (USA); Veterans’ Day (USA); Remembrance Day (CAN);
Thanksgiving Day (USA); and other Major Sport and Charity events
Islamic New Year; Christmas Day; Boxing Day (CAN); and other Major Sport and
Charity events
Plan B
In the unlikely event the Final Solution and the other three alternatives do not work. We have a
final exit strategy planned.
Cutting costs is one final exit strategy that we can definitely rely on. If we formed contracts
with companies in China or Japan to create the Blackberry hardware, it would greatly reduce
our costs. With reduced fixed costs we can reduce the selling price to compete with Apple to
obtain profits and sales. It would also lead to a higher percent margin on products. Moreover
with the excess profit, Research in Motion could spend it elsewhere such as marketing; in which
it lacks. However, it should be noted that even though a majority of Blackberry’s are made in
Canada, some are made in Asia.
Cutting costs also benefits Research in Motion’s marketing strategy. If the phones are cheaper
to make, RIM could sell their products for much less. With incentives such as “20% cheaper
then previous the Blackberry” it would be an excellent marketing strategy. Promoting more
people to buy it and shifting away from Apple, especially if it is cheaper than the iPhone.
Currently, Research in Motion’s entire line of Blackberry is made in Canada. And is assembled in
house. Whereas a company in China called Foxconn makes the Apple’s iPhone. In total it costs
Apple $173 to make an iPhone 3GS, and it costs Research in Motion $203 to make a
Blackberry in Canada. If RIM also moved their production to China or Japan, it would cut the
$203 cost to much less.
To conclude, Research in Motion should definitely consider moving ALL of their production over
to China or Asia. Should the Final Solution and all of the other 3 alternatives do not work. It
would greatly reduce costs and it would be very helpful to be used as marketing incentives.
11
Course Concepts/References
1. http://cedarcrestmarketing.blogspot.com/2009/01/mission-statement.html
http://answers.yahoo.com/question/index?qid=1006013002272
2. http://www.rim.com/newsroom/media/company/index.shtml
3. http://finance.yahoo.com/news/Research-In-Motion-Reports-iw1951190285.html?x=0&.v=1
4. http://www.bloomberg.com/apps/news?pid=20601204&sid=ajgLmjh2Ukzo
5. http://blog.compete.com/2009/04/08/blackberry-passes-iphone-online/
6. www.Apple.com
7. www.BlackBerry.com
8. www.BizAmmo.com
9. www.BCIT.ca
10. www.CNET.com
11. www.CNNMoney.com
12. www.Google.com
13. www.Goop.com
14. www.Rogers.com
15. www.SearchMobileComputing.com
16. www.TELUS.com
17. http://blackberryproductfans.blogspot.com/2008/04/blackberry-swot.html
18. http://www.theglobeandmail.com/report-on-business/optimistic-rim-unveilsstorm-2-smart-phone/article1325848/
19. http://www.bloomberg.com/apps/news?pid=20601082&sid=aua.HGf7x_LY&refer=cana
da
20. http://www.gartner.com/DisplayDocument?id=998813
21. http://www.internetnews.com/wireless/article.php/1497081
22. http://www.latimes.com/business/la-fi-china-iphone162009oct16,0,1021033.story?track=rss
23. http://www.telecomasia.net/content/rim-eyes-china-telecom-blackberry-expansion
24. http://www.cata.ca/files/PDF/Resource_Centres/hightech/reports/studies/quebecRIM.pdf
25. http://www.quote.com/us/stocks/financials.action?s=RIMM&page=incst
26. http://apple.click2creation.com/index.php/2008/11/apple-entire-ad-budget-486mcompared-to-vista-300m/
Concepts
1. Co-branding (ch.9/p.254)
2. Brand Licensing (ch.9/p.255)
3. Designing Distribution Channels (ch.13/p.364-370)
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