Case Assignment: Marketing Strategies RIM versus Apple Team Members: Maninder Badial Kyle McIntosh Thomas Ngo Gary Ginn Harvard Sung Jas Sanghera Introduction: In 1984, a small entrepreneurial business called Research in Motion (RIM) was created by three engineering students at Waterloo University in Ontario, Canada. At the time, the business' purpose was to fulfill the needs of their friends. But as time passed, they slowly climbed from a two way pager to competing with the world to be the number one provider of mobile internet telecommunications and entertainment devices. Problem Identification (Objectives): The issues are to determine the appropriate strategy for marketing BlackBerry Smartphones, to promote new products and determine a reasonable yet profitable selling price. Facts & Assumptions: Facts BlackBerry isn't only competing with apple, but with the whole world More than just a product, brand inspires extreme loyalty and interest among consumers worldwide.aka “Crackberry.” Known for their traditional QWERTY keyboard BlackBerry to release the BlackBerry Storm2 Apple recently released its iPhone 3GS iPhone users: 15-24 31% 25-34 32% 35-49 31% 50+ 6% Current Smartphone Market Share Symbian RIM BlackBerry Apple iPhone Windows Mobile Google Android Other The following values are only approximates: Estimated World Population: 33.5 million (33,492,822) 100% Symbian OS users: ~17 million people (16,846,889.466) 50.3% RIM OS users: ~7million people (6,999,999) 20.9% iPhone OS users: ~4.6 million people (4,588,516.614) 13.7% Windows Mobile: ~3 million people (3,014,354) 9% Google Android: ~1 million people (937,799) 2.8% Other: ~1.1 million people (1,105,263) 3.3% 2|Page Assumptions Different strategies have different target market The pricing will continue to be competitive with the BlackBerry products (due to other phone companies) In the case BlackBerry/RIM has not started large scale expansions into the Asian markets RIM has the necessary funding to support upgrades and research to the new BlackBerry as well as the costs of advertising and be able to implement the plan. Key Findings: Value Proposition of BlackBerry: E-mail Focus There was a sizable target market of corporate users for whom e-mail access on the go was very important. Keyboard The keyboard approach has led many to buy the BlackBerry because many people prefer the feeling of a keyboard rather than a pen based input. The innovative Track Wheel It made navigation through the BlackBerry menu more easily accessible and it was also conveniently located. Push E-mail This was the key RIM innovation that led to many addictive qualities because you were able to start an instant messaging style conversation with someone far away. It made the BlackBerry standout from its competitors for a very long time. Impenetrable Security RIM focused on building an enterprise server by providing an end-to-end security based on triple DES encryption. iPhone OS Key Information Apple has its own mobile operating system The iPhone OS, previously known as OS X iPhone, is the operating system developed by Apple Inc. for the iPhone and iPod touch. iPhone is popular for its downloadable applications. As of September 28, 2009, there are over 85,000 applications officially available for the iPhone and 2 billion downloads had been achieved. Nokia - Symbian OS Key Information Adopted the Symbian mobile operating system Symbian OS was created with three systems design principles in mind: the integrity and security of user data is paramount, user time must not be wasted all resources are scarce 3|Page Windows Mobile OS Windows Mobile is a compact operating system developed by Microsoft, and designed for use in smartphones and mobile devices It is the 4th most popular smartphone operating system, with a 9% share of the worldwide smartphone market. Most Windows Mobile phones come with a stylus pen, which is used to enter commands by tapping it on the screen BlackBerry Storm 2 Specifications: Cost Breakdown BlackBerry Bold Bill of Materials (BOM) = $158.16 Manufacturing cost = $11.25 Production cost = $169.41 Apple iPhone Touchscreen = $33.50 Touchscreen controller = $1.15 Production cost 4GB model = $245.83 Production cost 8GB model = $280.83 Apple iPhone 3G Production cost - $174 (dropped to $148 in 2009 and expected to drop to $126 in 2012) BlackBerry Storm Qualcomm communication processor = $35 3.2-megapixel camera = $13 Production cost = $203 4|Page The good: The iPhone 3G S finally adds common cell phone features like multimedia messaging, video recording, and voice dialing. It runs faster; its promised battery life is longer; and the multimedia quality continues to shine. The bad: The iPhone 3G S' call quality shows no improvements and the 3G signal reception remains uneven. We still don't get Flash Lite, USB transfer and storage, or multitasking. SWOT Analysis: Environment Internal External Positive Evaluation Strengths: Brand Loyalty Good Brand Awareness 92% of sales are international (global brand) Diverse business- award winning products, services and embedded technologies (variety of phones) Battery Life Endorsements- popular people that use BlackBerrys (i.e.: U2 commercial) Can’t wire tap a BlackBerry (more privacy) BlackBerry App world Opportunities: Rhapsody Run more Apps Google Apps Video calling 4G/5G Networks Asia/Eastern markets Marketing Mix: Product: BlackBerry Different Models: Storm, Pearl, Curve, 7100, 7200, 8700, 8800 Promotion: Verizon Wireless' back to school promotion: Offered a Buy One Get One Free (aka BOGO, side note: expired Oct 10) Negative Weaknesses: Navigation System Slow web browsing and overall functionality Threats: Other companies taking market share Apple- iPhone, OS Palm OS Pre HTC, Google Android, Mytouch Symbian OS- Nokia and NTT DoCoMo Windows Mobile Price: Ranges from $399.99 - $649.99 CDN (with no contract) Ranges from $9.99 - $249.99 CDN (with a contract) Place: Worldwide Especially in business-filled locations (for example, downtown New York City, downtown Toronto, downtown Vancouver) High distribution intensity Corporate market 5|Page Target Market: The original objective of BlackBerry phones was to aid business professionals. The functions like the mobile trial version of Microsoft Office and wireless connectivity ability on the go for faster paced Internet Connection are just some of the reasons why business professionals have decided to purchase the BlackBerry. In recent news, BlackBerry has begun to target younger generations through style and function. In the recent BlackBerry models, it comes with a camera, preloaded series of games and applications such as Facebook. It has also launched its BlackBerry App World with applications of all sorts to target many different types of people Differentiated Segmentation Strategy: A strategy through which a firm targets several market segments with a different offing for each. BlackBerry Pearl and Pearl Flip : Teen market BlackBerry Storm: Consumer segment BlackBerry Tour and BlackBerry Curve 8900: Enterprise customer Competitive Analysis: WINDOWS MOBILE (BlackBerry vs. Windows Mobile) It is the 4th most popular smartphone operating system, with a 9% share of the worldwide smartphone market. Windows Mobile's share of the Smartphone market has fallen year-on-year, decreasing 2.7% in 2009 Market Share: In 2004, Windows Mobile accounted for 23% of worldwide smartphone sales. By 2008, its share had dropped to 14% In February 2009 Microsoft signed a deal with the third largest mobile phone maker, LG Electronics, to license Windows Mobile on 50 upcoming LG smartphone models But in September, 2009, Palm, Inc. announced it would drop Windows Mobile from its smartphone line-up The Samsung Omnia Pro B7330 runs the Windows Mobile operating system. An October 2009 report in DigiTimes said that Acer will shift its focus from Windows Mobile to Google Android. Identify the current/potential competitors & relevant products Symbian BlackBerry (RIM) iPhone (Apple) Others: Google Android, Palm Pre, etc Other companies versus your company Symbian, Apple, and BlackBerry blow Windows Mobile away. Distribution: Windows Mobile comes installed in many different phones, which are available worldwide. Most Windows Mobile users are located in North America. What do you need to consider with regards to the competition for each case? Other operating systems user interface 6|Page Cell Phone companies that use Windows OS: HTP HP I-Mate LG Motorola Palm Pantech Samsung Value proposition of Windows OS Feature Windows Mobile 6.5 Standard Pro Updated lock X screen Updated Today Screen X Updated Start Screen X Internet Explorer Mobile X X Windows Marketplace for Mobile Windows Media Player Mobile X X X X Microsoft My Phone X X Social Networking Apps X X Designer themes X X MSN Widgets X X The new lock screen displays new messages and appointments without requiring that you enter a PIN when the phone is locked. You can easily customize your Today screen to display and access new emails, text messages, and other highlevel information with a simple tap The new Start screen provides ultimate access and control: quickly browse and open programs; easily customize program order (move the most used apps to the top) and add your favorite web sites Internet Explorer Mobile 6 provides a full, rich web viewing experience similar to the experience on your PC With Windows Marketplace for Mobile you can find and download the latest apps for your phone The improved Windows Media Player Mobile lets you view full-screen video and provides audio and video playback enhancements, like pausing a song or video when you receive a call Use the new My Phone Service to sync your phone and data to the web so it’s backed up and accessible The Facebook Mobile and My Space Mobile apps, now included on several phones, let you manage your accounts and add content while you’re on the go Express your sense of style with designer-theme-based phones (like the new Halo design) or create your own custom themes The new MSN Widgets provides realtime information on weather and stocks 7|Page Symbian OS Symbian is the leading OS in the "smart mobile device" market. The only company that adopted this OS was Nokia, it isn’t a bad OS, but many of the other competing companies prefer the other OS’s. What do you need to consider with regards to the competition for each case? Other companies can provide better service mobile operating system Other companies can provide a more user friendly OS Popularity of other OS’s Identify the current/potential competitors & relevant products RIM – BlackBerry OS Apple – iPhone OS Microsoft – Windows CE and Windows Mobile Others: Palm OS, Qualcomm’s BREW, Google Android, SavaJe, Linux, MontaVista Are they strong versus your company? Symbian is the world's most popular mobile operating system, accounting for ~50% of smart phone sales which makes Symbian strong in terms of market shares. How do they compare? About 50% of the worlds Smartphone sales is serviced by Symbian RIM BlackBerry services is just under 21% of the worlds Smartphone sales Value proposition: Symbian’s Value proposition is to create an unparallel open software platform for converted mobile devices and allow accelerated innovation across the whole mobile market. Also provides a set of productivity tools (Spreadsheet, word processor, etc) which allow business professionals on the go to work while moving around. Market Share: Symbian owns 50.3% of the world market almost 17 million users Distribution: Since Symbian is currently only being used by the Nokia company, the Symbian OS is distributed wherever Nokia distributes its cell phones which would be worldwide, in many parts of Asia and in North America. Nokia is more of an Asian based company thus most of its products are focused on Asian stores. Apple Inc. (OS X iPhone) Apple is most likely the most well known to North Americans by teens and young adults. Its iPhone OS is currently the third largest in the world behind the RIM BlackBerry OS. Apple has launched many other products related to its i____ theme. It has an application store where apps can be purchased or downloaded for free. Comparable products: iPhone 8|Page Market share: 13.7% of the market share (only for smartphone) Has a Comparable price: Is a substitution for the BlackBerry Storm Distribution: Apple Stores Cell Phone retailers Stores like Future shop or Best Buy The internet www.apple.com Almost any other channels where consumers can purchase iPods or Macbooks Target market: The market that apple began with when it created its iPhone was for a part of the market called “creative people”. This target market is very general, but apple has been able to get people all around the world to notice their products. Also, MobileMe formerly called .Mac or iTools was collection of online services and software offered by Apple through paid subscription service. It was designed for users of Mac OS X. On July 9, 2008, Apple has recent re-launched this service but it is now targeted at Mac OS X, Windows, iPhone and iPod Touch users. Apple's Value Proposition: A lot for a little An iPhone is marketed as a do everything device It has compressed many popular products into one small device. (E.g. GPS, Ebook Reader, handheld gaming) giving the consumer the greatest bang for buck ratio. With the Apps store the possibilities are endless Comparison Chart of BlackBerry Storm and Apple iPhone 3G S: BlackBerry Storm Apple iPhone 3G S Multi-tasking Yes No Storage (internal) 1GB 16GB/32GB Removable battery Yes No GPS Yes Yes SMS/MMS Yes Yes Expandable Memory Yes No Wi-Fi No Yes Video Camera Yes (3.2 MP) Yes (3 MP) Screen Size 3.25-inch 3.5-inch Battery (Standby time) 356 hours 300 hours Battery (Talk time 3G) 6 hours 5 hours Media Player Yes Yes (integrated iPod) (Audio, Video) Bluetooth Yes Yes Touchscreen Yes Yes 9|Page Growth Analysis: Market Penetration: employs the existing marketing mix and focuses the firm’s efforts on existing customers. Market Development: employs the existing marketing offering to reach new market segments, whether domestic or international. Product Development: offers a new product or service to a firms current target market. Diversification: introduces a new product or service to a market segment that is currently not served. Current Market Penetration: Global Market (92% of revenues comes outside of Canada) Fastest growing company in the WORLD (According to Forbes) New Product development: Implement the 4G network as soon as possible which would make BlackBerry the only smart-phone device solution with this network. Having an HD capable phone with a network faster than your current internet at home, would most likely put RIM ahead of Apple. One of the main advantages that 4G technology will have over 3G is higher data rates. This will benefit the user by allowing faster access to multimedia and video while on the move. 4G: A spectrally efficient system High network capacity A nominal data rate of 100 Mbit/s A data rate of at least 100 Mbit/s between any two points in the world Smooth handoff across heterogeneous networks Seamless connectivity and global roaming across multiple networks High quality of service for next generation multimedia support (real time audio, high speed data, HDTV video content, mobile TV, etc) Implement Rhapsody service Implement live video conferencing system Market Development: Continue penetrating market of BlackBerry Storm users Get into large demographic areas with lots of teens, consumers, and business professional markets 10 | P a g e Diversification: BlackBerry LED/LCD Monitor BlackBerry LCD/Plasma TV’s BlackBerry PC (business computers) and Computer Accessories BlackBerry Home Phones Offer free media (audio, video, applications, etc) to current customers for a limited time. Offer discounts to current customers if they need to upgrade to a new model. Strategies/Alternatives (Alternative Marketing Solutions) A. Global Expansion & Market Domination Strategy Goal: to increase Global market share by at least 15% Expand into Eastern (Asian) market and convert customers from Symbian OS / NTT DoCoMo, Inc. / Nokia which has over half of the market share for smart phones and operating systems (OS). Increase Breadth of RIM and BlackBerry. Also, increase the depth by adding the Omni Implementation plan: BlackBerry will increase its Market Diversification by surveying or Data mining what features are popular in Japan, China, etc and then incorporating them into our new super phone called the "Omniscient" or Omni, for short. Advantages: 1. Larger Market with different country culture (learn many new things) 2. Increased Depth: more products available to the customer 3. Can use phone created in Asia and sell it in the Western Nations 4. Increase global Brand Awareness Disadvantages: 1. Could waste resource - a lot more costs 2. Might be hard to decode information and implement different aspects 3. BlackBerry could change their phones too much and ruin customer loyalty (Brand dilution: occurs when a brand extension adversely affects consumer perceptions about the attributes the core brand is believed to hold) B. Event Promotion Strategy Goal: To expand the BlackBerry market and promote the reputation of RIM to the whole world. Implementing plan: Sign a contract with VANOC supporting the 2010 Olympics in Vancouver Offer support to athletes and make ads with BlackBerry to promote the phone. **Special Olympic event: including door prizes of BlackBerrys.(Special design on BlackBerry to commemorate the 2010 Olympics in Vancouver Limited Edition only 100 available) will be distributed evenly between events** (99 BlackBerrys /15 events with 7 BlackBerry hand outs will be in the more major events.) Update the BlackBerry so that it is looks more sleek and high-tech (more appealing to new target market) Unveiling of the new updated version of the BlackBerry and the Olympic edition BlackBerry will occur during the opening ceremony on Feb 12, 2010. (One Olympic limited edition BlackBerry will be given to the mayor of Vancouver.) 11 | P a g e T-shirts (two types: white and black with BlackBerry text across the chest) will be handed out during the opening ceremony. They will be shot out of t-shirt cannons into the audience at random. Why will it solve the problem? We are introducing BlackBerry to a different target market (younger age group: 1625) thus allowing RIM to compete with Apple head on (in which Apple dominates in) How would a change in pricing and store operations deliver more sales? Lowering the price would influence consumers’ decision making. A cheaper price or markup for any product will always draw more attention. If the lowered price is cheaper than the products of its competition, it will sell more. Quote: "A change in price will inversely affect the demand of that product" How/why will the target market respond? BlackBerry provides new and improved BlackBerry which draws more consumers’ attention. Consumers enjoy new products and innovations People will learn about the new updates and upgrades to BlackBerry's products during the promotional event held at the Vancouver 2010 Olympics. From this, they will become curious and begin looking into the products. Advantages: 1. A lot of people will see the advertisements, Global event- high traffic which leads to increased number of potential customers 2. Change in target market since BlackBerry will be featured with athletes, hopefully this will target younger ages from 16-25. This will allow BlackBerry to compete against iPhone's domination in that target market 3. Promote the good reputation of RIM BlackBerry; North Americans will think of RIM when someone says Smartphones and less of Apple. This will also show the Canadian side of RIM since it is a Canadian company after all. Disadvantages: 1. Going to cost a lot for the contract with VANOC/athletes and setting up ads for BlackBerry. Also cost of the BlackBerry for the door prizes and upgrades. 2. Advertising space is probably limited due to the fact that we're proposing to sign up with the Olympics this late. 3. Major risks to the company reputation especially if there are complaints about the BlackBerry from consumers during Olympics. There will be a big dent in the reputation of BlackBerry and RIM in the world's eyes. If this occurs, it would take years to regain their image. 12 | P a g e C. Promotional Savings Strategy Goal: to target lower income bracket individuals and persuade them to buy a BlackBerry. Implementing Plan: Promotion: refer a friend get 20BB (BlackBerry) Bucks- this will appeal to people with large networks Receive a free gift card when signing up for a new contract Gift card money value depends on the number of years the contract is signed for e.g. 1 year = $50 2 years = $100 3 years = $150 Offer free media (songs, videos, ring-tones, etc) and applications for a limited time after signing a new contract with the cellular company Advantages: 1. Potentially attract a number of new customers 2. Refer-a-Friend program, free advertising and gain publicity 3. Long-term customers, gain profit in the long run Disadvantages: 1. High risk involvement 2. Needs finance for the promotion 3. Short-term: Lack of customers may risk of having no profit Recommended Solution: The recommended solution is Strategy A to promote global expansion and strive towards market domination. BlackBerry will implement a Concentric Market Diversification strategy by surveying or Data mining what features are popular in Japan, China, etc and then incorporate them into our new super phone called the "Omniscient" or Omni, for short. Implementation Plan: 1. Begin Research Process 2. Find what appeals to consumers in the Asian Smart phone Market. Such as, features, design, pricing information, and demographic information. 3. Design the BlackBerry "Omni" 4. The Phone will incorporate features from the previous models, such as the QWERTY keyboard, and features that are popular in the new market, such as the E-money services and "Gyaru-moji" texting options. 5. Select an Asian cell phone service provider The provider should be reliable and popular so BlackBerry phones can be available to as many new customers as possible SoftBank service provider is very popular in Asia 6. Set up an overseas BlackBerry production plant With a local production plant it will cut down on transportation costs therefore allowing BlackBerry to offer their phone at a lower price making it more appealing to the market. 7. Create Media Buzz Show the BlackBerry "Omni" at this year’s Consumer Electronics Show in Las Vegas This will create all sorts of hype that will be good for the sales of a product. 13 | P a g e 8. Open discount BlackBerry Stores in major cities all over Asia This is where consumers can come and purchase products at lower prices. What we aim for: Symbian RIM BlackBerry Apple iPhone Windows Mobile Google Android Planned Future Smartphone Market Share Plan B Other (Palm, Etc.) The backup solution is Strategy B where RIM strategizes in advertising projects during events. It is a solid alternate solution since the advertising project will be held during the Vancouver 2010 Olympics and there will be millions of people attending to promote the product. Plan of Action: 1. A new design project which will update the previous BlackBerry phones so that it will look more sleek and high-tech in order to be appealing to the new target market. 2. Then RIM will sign a contract with Vancouver Organizing Committee (VANOC), the committee that is responsible for organizing and supporting the 2010 Olympics in Vancouver. 3. Once a contract is signed and approved, RIM begins contacting the athletes to offer support. In return for RIM's support, the athletes will agree to be in BlackBerry advertisements (televised commercials, posters and billboards) to promote BlackBerry phones. 4. RIM will begin modeling the Olympic 2010 Limited Edition BlackBerry. Will include a special design on them to commemorate the 2010 Olympics. There will only be 100 Vancouver Limited Edition available that will be distributed evenly between events. 5. RIM will also promote a "Special Olympic event." This special event includes door prizes of BlackBerry phones. 6. The BlackBerry's will have a 7 Limited Edition BlackBerry's will be handed out in each of the 15 events (99 total). The one remaining BlackBerry will be given to the Mayor during the opening ceremony. 7. An unveiling of the new updated version of the BlackBerry and the Vancouver Olympic Special Edition BlackBerry will be held during the opening ceremony on February 12, 2010. 8. There will be two types of T-shirts available. A white and black shirt with text with BlackBerry text across the chest. These T-shirts will be shot out of t-shirt cannons into the audience. 14 | P a g e Course Concepts Marketing Mix (4 P's) - We used marketing mix to analyze the type of product is being marketed, how much the product is retailed for, what type of advertising and marketing strategies are in place, and the location of where the product is marketed and sold. SWOT Analysis : We used this concept to form out alternatives and used to compare with the competition Growth Analysis: Growth Analysis helped us in determining possible solutions to RIM's/BlackBerry's problems. This concept also contributed to the opportunities part of SWOT analysis Segmentation: Targeting-positioning - We used this concept to find the target market of the BlackBerry and iPhone Market research process: We used this when comparing the competition Consumer decision process: This is used to see why consumers bought the competition's products over BlackBerry's. 15 | P a g e References: BlackBerry. 20 October 2009. 20 October 2009 <http://upload.wikimedia.org/wikipedia/en/thumb/f/f4/Smartphone_2009.svg/45 0px-Smartphone_2009.svg.png >. Block, Jason. 611 Connect. 1 October 2009. 20 October 2009 <http://www.611connect.com/expert/jblock-what-best-smartphone-os>. Courtney, Jim. "A New Era Coming for BlackBerry." 12 May 2008. 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