Research in Motion was a Waterloo based company established in 1984. It was a manufacturer of popular Blackberry mobile phones and the enterprise server required to support the communication system for Blackberry users. Blackberry was very popular among enterprise users and professional individuals up until 2009, with major portion of their market located in the US. (Gustin, 2013) In January 2013, following a collapse in its market share, Research in Motion was rebranded to Blackberry, its' signature product. (Zeis, 2013)
Competitive Position:
- Product & Market Segment
Blackberry has been described as a combination of a PDA with a cellphone which included mobile internet and Email. The email functionality and constant connectivity of Blackberry have been vital for the users of the device as it facilitated communication. Among other most important features of Blackberry is security and user-friendliness. Blackberry has been considered the most secure device among the competitors' (Reardon, 2013). This has led Blackberry to find popularity among segments that have security concerns and are more sensitive to information leakage and loss of control. In fact, Blackberry's primary target market is government and enterprises. (Mazutis, 2011)
The second major target market of Blackberry is business professionals who are heavily invested in timely communication. This market has been known as prosumer market- Blackberry owners who use the device both for professional and personal purposes- in comparison with enterprise market in which the employer purchases the product for employees solely for professional uses. (Oliveiria, 2013)
The third market segment which I believe Blackberry has little influence on, is the consumer market, non-professional individuals who purchase the product for personal use. Blackberry has been more focused on fulfilling the needs of the other two segments than the latter. This led RIM to invest more heavily on the PDA market- a complete communication tool- than on smartphones, which are more appealing to the consumer market . We will see later on that Blackberry made some efforts to attract this segment.
Following its collapse in the stock market, Blackberry lost a big portion of its users to the competitors. I, personally, have never met a Blackberry user. However, it seems that the Blackberry users can be divided into two categories. First, enterprise users who value security and ease of use among other attributes of the product and are more loyal and less price sensitive. Second, young (20 to 30 year old), medium to high level income busy professionals who value seamless communication and are influenced by fashion trends and the once popular and iconic design of the product. It seems that they, too, do not mind the higher prices as long as they can keep up with the latest trends. This category is considered brand conscious but less loyal than the previous category, as it will be later revealed that they did not hesitate to switch teams when other devices entered the market and became fashionable.
- Market Share & Missed Opportunity
Looking at the five forces model for Blackberry’s previous position in the market, the threat of substitutes, specifically smartphone, was incredibly high. The PDA market has slowly eroded while the smartphone market was having a boom period. Competition through substitutes was also incredibly high. Many companies entered the market, such as Google Android phone and Apple, which entered the market in 2007 and changed the design standards in the industry. Currently, Apple has more than 40% market share in the smartphone market (Edwards, 2014). Furthermore, the bargaining power of consumers is also high as there are many products to choose from and the switching costs are relatively low as most devices offer more or less the same features and there are apps available that enables transferring data from one phone to another. Therefore, RIM’s resources were not absolutely competitive and sustainable.
Blackberry has always been a leader in the PDA market. However, it failed to recognize the value of the emerging smartphone market and waited too long to respond to the changes in the industry. Blackberry released couple of smartphones but it was too late, and in a market that they had little presence, not surprisingly, they failed to sell. When the PDA sales were starting to level off, smartphone sales were increasing at an incredible rate with much higher sales compared to the PDA market. This suggests that RIM was handing over its potential customers to competitors in the smartphone market while staying in their comfort zone, which was the PDA market.
Companies such as Palm and Hewlett-Packard were leaving the PDA market then, perhaps intentionally, because they were no longer focusing on that segment. While RIM had little market share in the smartphone segment, their units sold in that segment was far more than the units sold in their PDA market. They could have become the industry leader, had they redirected their resources to the smartphone market. They could have become Apple, cause Apple didn't exist back then.
Another fair critique would be that even after their struggles to penetrate the North American market (which is their main market) because of their much delayed efforts, they did not immediately recognized the potential in the growing Asian market. The American market was already saturated as smartphone lovers have already acquired theirs from competitors but the developing countries could have been a good market to target. Some would argue that they were hesitant to enter these markets fearing that their security features would be pouched. (Mazutis, 2011) We will see later on that their current strategy is focused on the market in the developing countries.
Overarching Marketing Strategy:
The present marketing strategy of the RIM/Blackberry cannot really be differentiated from its' past strategy. There are minor changes made to the overall corporate strategy, but the overarching marketing strategy has more or less stayed the same. Some would argue that this is the reason Blackberry cannot find its way to the top again. (Hartley, 2014) Blackberry has always put the enterprise market first, and tried to build brand loyalty and trust in that market by dedicating its resources to this segment. Customization is an example of a service that Blackberry offers to enterprises to meet their needs. (Hartley, 2014) Blackberry also used celebrity endorsement and was featured in American TV show, Ugly Betty, showing the device being used by young and busy professionals. However, Blackberry still suffers from the lack of brand awareness among major users of smartphones, millennial.
The new CEO of the company, John Chen, is also planning to pursue the Enterprise market and “return to the company’s core strength- enterprise and security- and maximize efficiency”. (The Globe & Mail, 2013) The two main changes that John Chen has made are partnership with Foxconn to manufacture smartphones (The Globe & Mail, 2013) and aiming at developing countries’ market. (Reardon, 2013) According to the CEO of the company:
"We are focusing our design and hardware team on developing high-quality products at competitive prices (through leveraging Foxxonn's sale and efficiency)." (Reardon, 2013)
Blackberry has just launched a new smart phone- Passport- a passport size square shaped phone with a keyboard. In the next sections of the report, we explore the market response to Passport further.
References:
Edwards, Jim. 2014.
Business Insider. Retrieved from: http://www.businessinsider.com/iphone-v-android-market-share-2014-5
Gustin, Sam. 2013.
TIME. Retrieved from: http://business.time.com/2013/09/24/the-fatal-mistake-that-doomed-blackberry/
Hartley, Matt. 2014.
Financial Post. Retrieved from: http://business.financialpost.com/2014/01/13/blackberry-ltds-john-chen-sticking-to-strategy-of-going-with-who-he-knows/?__lsa=2575-b891
Nathan. 2013. BlackBerry shows off some of its 70,000 new third-party apps,
including Skype, Rdio, Kindle, and Whatsapp. The verge. Retrieved from:
http://www.theverge.com/2013/1/30/3932042/blackberry-10-apps-announcement
Mazutis, Daina. 2011. Research
In Motion: Managing Explosive Growth. Richard Ivey School Of Business.
University Of Western Ontario.
Oliveiria, Michael.
2013. Blackberry defines its ‘prosumer’ target market. Hamilton Spectator.
Retrived from: http://www.thespec.com/news-story/4164029-blackberry-defines-its-prosumer-target-market/
Reardon, Marguerite.
2013. Retrieved from: http://www.cnet.com/news/blackberry-ceo-details-survival-strategy/
Statista, 2014.
Retrieved from: http://www.statista.com/statistics/263439/global-market-share-held-by-rim-smartphones/
Telegraph, 2014.
Retrieved from: http://www.telegraph.co.uk/technology/blackberry/10237847/BlackBerry-timeline-from-RIM-to-RIP.html?mobile=basic
The Globe & Mail,
2013. Retrieved from: http://www.theglobeandmail.com/report-on-business/blackberry-ceo-the-journey-has-just-begun/article16125601/
Zeis, Adam. 2013. Retrieved from: http://crackberry.com/research-motion-limited-officially-renamed-blackberry-limited.
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