Case 1
Introduction
RIMs Blackberry device marketplace dominance is being reduced due to increased
competition from other manufacturers.
Problem
How can RIM increase their global market share and maintain brand dominance in the
smart phone market?
Key Findings
RIMs Q2 2009 global market share was 20.9%, with a 52% share in the North American
market. They operate globally with 92% of its 2008 revenues coming from outside of
Canada. The Blackberry brand is an award winning line of products that has an extremely
loyal customer base. It is “the” Smartphone. Primarily positioned for business
professionals, but becoming more popular with consumers due to lower prices and
availability of wireless cellular internet. The Blackberry combines multiple devices into
one, allowing people to multitask without having to carry an assortment of gadgets. Also
allows users to take with them, what normally you would need to do at home/office, such
as email, tv, music, etc. RIM is starting to lose market share to other competitors, namely
Apple. Business strategy is to capture market share by improving product line and
expanding growth in international markets and in new market segments. Touch screen
smart phones represent 40% of the market.
SWOT Analysis
Strengths
 Globally known Company
 Wide range of award winning products, services and technologies:
 Blackberry
 Other wireless devices
 Software development tools
 Radio Modems
 Software/Hardware licensing agreements
 Each SBU operates independently of one another
 Fastest growing company in the world as listed by Forbes
 Massive customer base
 Over 14 million people use Blackberrys in over 135 countries
 Blackberry is an addictive brand
 Known to fans as “Crackberry”
 Every new product released is reported by the global media and followed closely
by the tech press
Weaknesses
 Blackberry brand has reputation for being more for business professionals, rather
than consumers
 Less “hip” than Apple’s Iphone
 Suffers from too many products
 RIM must balance its attention between multiple Blackberry lines
 Apple only has to focus on its one phone, the Iphone
 Blackberry targets a very specific market group
 Higher end consumers
 Blackberry apps are more expensive to buy than Apple’s Itunes apps
Opportunities
 New emerging and developing markets
 International development of infrastructure to support the Blackberry line of
products.
 Africa
 India
 China
 Consumers demanding ability to take everything they need with them wherever
they go
 New generations have grown up with smart phones and will continue to desire
them
 Internet 2.0
 Consumers want to be able to communicate with friends and family and keep up
with what’s new no matter where they are
 Facebook
 Twitter
 MSN/BBM/Ping
 Email
Threats
 Apple
 Has reputation of producing fun, hip, and easy to use products
 Iphone is emplaced as “the” touch screen phone
 Direct competitor to Blackberry Storm
 Still in growth stage of product
 3 revisions already developed in short product life
 Expanding rapidly due in part to Ipod and Itunes success
 Market being divided up by numerous competitors
 Sony
 Microsoft
 Palm - Pre
 HP
 Nokia
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Samsung - Omnia
Market Saturation
Almost every manufacturer has a line of smart phones
RIM/Blackberry is the target of all competitors
Blackberry is the one to beat
Apple’s new Ping app targets Blackberry Messenger
Competitive Analysis
In the global smart phone market, Nokia is the market leader with a 44.3% share in Q2
2009. Another major player is Apple with a 13.7% global market share, the 3rd largest
behind RIM. This represents 30.1 million shipments globally in Q2 of 2009. Apple’s
Iphone is a direct competitor to RIMs new Blackberry Storm. There are many other
minor competitors, but for the purpose of this analysis, Apple will be our focus.
Apple is relatively new to the smart phone market, but has enjoyed rapid market
expansion. Their computer and MP3 player lines have built them an extremely loyal
customer base, and they have used this to their advantage with the Iphone. Apple’s Itunes
store has become the largest music retailer with more than 2 billion songs and 1.3 million
movies sold on it. The Iphone interacts with Itunes by allowing users to sync media,
contacts, and apps between the two. Apple has a massive and well known marketing
campaign that dwarfs RIMs in comparison. Everyone has seen an apple commercial.
Conversely, one would be a lot harder pressed to find someone who remembers seeing a
Blackberry ad. Apple also has a history of directly attacking flaws in their competitor’s
products, such as in the Mac vs. PC ads. This would have to be taking into account for
any new products being introduced into the marketplace. Apple also operates its own
chain of retail stores where a consumer can purchase any of the Apple line of products in
one place, along with being available wherever Blackberry products are sold.
Target Market
In 2007, 61.7% of all Canadians had a cell phone, with the percent being 83.5% in the
USA. This translates to 20,299,300 people in Canada and 255,510,000 in the US. The
smart phone market makes up about 35% of all cell phone users, or 7,104,755 Canadians
and 89,428,500 Americans. This market can be further broken down into 3 main types of
users: entertainment-focused users, communication-focused users, and informationcentric users. Surveys completed by more than 12,000 people across the USA, UK,
France, and Germany show that each of these segments makes up about 12% of the smart
phone market, or 852,570 Canadians and 10,731,420 Americans. Our current target
market is the communication-focused user. This user is between the ages of 25-45 and
almost equally male and female. This segment is typically employed as a business
professional and therefore has a post-secondary education and an average to higher than
average income. This user segment can be reached through traditional means, but
typically the most effective means is through internet, tv, and movie advertisements. This
is due to the fact that a large part of this group’s time is spent using these mediums, either
for business or pleasure.
Recommendations
1. Expand Target Market to also focus on information-centric users
 This strategy will focus on the untapped market of PDA users. By developing
a new generation of PDAs, RIM could potentially become the leader of this
market segment.
Advantages:
 Little or no competition
 A step up in overall dominance of wireless electronics
 Cross-sectional loyalty—consumers of one category may cross over into
another
 Disadvantages:
 May fail in developing a new generation of PDAs
 Other competitors may notice and step in
 Requires major time and monetary investment
2. Expand Blackberry App world to compete better with Itunes app store
 This strategy will focus on developing the Blackberry App world to compete
with Apple in the dominance of more ‘hip’ consumers.
Advantages:
 Customized programs will allow ‘hip’ consumers to have more fun with the
Blackberry
 Integration of personal entertainment programs with the Blackberry will
create the perfect personal wireless electronic—ready for entertainment or
work
 Able to compete with Apple in the ‘hip’ market segment
 Disadvantages:
 May have to change Blackberry technology to better integrate with new and
improved programs
 Requires major time and monetary investment to change the business image
of Blackberry
 Risk of stepping into the ‘circle of death’—it is very difficult to develop the
all-in-one perfect wireless electronic
3. Develop smartphones to win market shares from developing countries
 This strategy will focus on developing more simplistic products for the
developing countries, such as China and India. By establishing a foothold in
these countries, RIM will become a more global organization.
Advantages:
 RIM could become a more globally recognized brand through establishing a
base in these countries
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An extremely huge potential market—both China and India are growing very
rapidly in terms of living standards. People are starting to willingly pay for
high-end technologies
 A step up in global dominance of wireless electronics
Disadvantages:
 Major competition from brands within the countries
 Requires major monetary and time investment to establish a foothold in new
countries
 Government interference
Solution
Expand Target Market to also focus on information-centric users.
While the Blackberry is a market leader in the communication segment, we have found
with Palm and Microsoft focusing on the communication-focused user, and the decline in
PDA sales, that there is no major player manufacturing products geared towards the
information-centric user. This is a huge untapped market, with a size potentially as big as
RIMs current communication-focused user base. Product innovation has all but stopped
and these users are craving a new product tailored to meet their demands. There are few,
if any, devices on the market which focus solely on combining the features of a
traditional PDA with cellular phone service. Developing a product tailored to meet this
group’s specific, and currently ignored, requirements would allow RIM to expand
untouched into this market share.
These users tend to be technically savvy and willing to adopt new products early on, and
pay the premium when doing so. They are between the ages of 25-50 and predominately
male business professionals. This segment is easily reachable through most modern
means. However, the internet should be used primarily. This approach is preferred by
them and would entrench RIMs position of marketing a product directly to them. This
segment is also concerned with always having the newest gadgets, and having them as
soon as they are released, as long as they allow them to properly manage their
information.
Implementation Plan
In order to expand RIM’s target market to include the information-centric user, a new
product, or line of products will have to be developed. In order to do this, we recommend
RIM to do the following:
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Perform further market research targeted towards the information-centric users
Discover features wanted/disliked for product development—this will also help to
further define the market segment by age, gender, location, etc.
Develop relations with current/previous PDA makers
RIM could pursue the possibility of creating a joint venture product with another
well known manufacturer such as Dell, preferably one not currently making a
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smart phone—this would help reduce start up costs associated with creating a
product from scratch, and also RIM would gain valuable knowledge from actual
market experience of another’s product
Research markets to define what went well, what didn’t, and at what price point
Work with current cell phone providers to create a new Blackberry plan focused
on the needs of this market segment
Offer discounts/promotions to providers based on number of units sold
Joint marketing campaign—this new product will have to target only the
information-centric user
RIM will continue to make separate products for the communication-focused
users
Advertisment campaign will build off Blackberry’s current success and loyal
customer base
Blackberry has an excellent reputation for quality, this will reduce the effort for
product placement in customer’s minds
RIM will have to focus on the new segment, and describe how it is tailored
specifically for them
Releasing the new product early to the tech press will allow for hype to build
from positive reviews, and create demand where there might not have been
before—“The must have new blackberry of the year”
Also builds off information centric user’s preference of receiving information
from the internet
The price of the new product will have to be competitive to other current smart
phones, and comparative to other Blackberrys, at least for initial release, until
market share is captured and people demand this new product
RIM would be able to sell this product wherever their current products are sold.
This existing infrastructure will further reduce costs by not having to set up a
shipping system, or spend resources against product placement in new locations
RIM could develop a promotion where a trade in of an old blackberry could be
used as a discount on this new product
Plan B
Develop smartphones to win market shares from developing countries
The whole mobile phone market share for Blackberry is only 3.39%, according to the
statistics for 1st quarter, 2009, though the share of smartphone for Blackberry rose to 17.6%
at the end of 2008.
Currently, most BlackBerry smartphones are targeted to enterprise users, so they are
expensive. RIM is more focused on the market in North America. However, the rest of
the market is a large part in the world market. Price is the dominate issue.
This is where the BlackBerry 8520 will come in. The 8520 is the cheapest BlackBerry
Curve to date and has been selling around the world due to the fact that it can be offered
at such a low price. RIM could release additional lower-priced smartphones to reach the
market in South Asia and Africa. Several concerns below could help reduce the price of
Blackberry.
Land and Labor Cost—RIM could expand their manufacturing factories to other parts
of the world. The cheaper labor and land cost in developing countries helps RIM decrease
the inputs. Another way this could be achieved is through joint ventures with other
electronic manufacturers.
Raw materials cost—RIM could put efforts on developing new products which have
lower material costs. Phones with less features, or different types of technology could be
developed. Recycling and reusing materials is greatly recommended.
Cooperate with local handset operators—For instance, China only has two wireless
operators, China Mobile and China Unicom. If RIM could develop a concrete and
reasonable retail plan with these two companies, Blackberry could penetrate the Chinese
market much sooner and faster.
Course Concepts
1. For this case, we have applied marketing macro-environmental analysis factors,
such as
 Competitive analysis
 Demographical analysis
 Technological analysis
to identify RIM’s current position in the Smartphone market. According to the analysis,
RIM’s market share is relatively small even though it is expanding.
2. We have performed situational analysis by using SWOT. From that we know the
strengths and weaknesses of the company and its products.
3. Opportunities and threats from external environment
This part has provided us a clear picture of RIM’s potentialities and challenges.
4. Segmentation and Target market analysis
Analyzing the secondary data we searched from the internet tells that informationcentric user is a huge untapped market that became our future target market.
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Market Mix’s concept
Product – adding value, Utility, Ease of maintenance, communication, appearance
Place – be reachable. EBay, physical retail stores at malls, university districts
Price – be affordable by moderate income young and social group
Promotion – create awareness by advertisements