The marketing strategy of Blackberry - Essay Example

? Marketing Report Marketing Report Today is the era of technology, where everything is dependent on hi-tech accessories; people pay more attention to what gadgets they have than anything else. Much new advancement in this sector have been made and is still in progress to make the life of a common person easier and more interesting by developing tools like cell phones, iPads and iPods. The most rapidly growing and highly competitive technological industry that could be found these days is concerned with developing cell phones, where innovation occurs at a daily basis and every upcoming product holds some new advancement. Initially started as just the tool for making and receiving calls, this industry has now developed such cut throat products that could act not only as mere tools of communications but also as the personal assistants to their holders. Such products are more commonly referred to as smart phones, as they are like small networked computers in the form of cell phones, which are high-end, multifunctional, business-centric in structure with high resolution color displays and fast mobile processors (Zheng and Ni, 2006). Today, smart phones are equipped with technology and in built applications that can organize the whole day, access internet from anywhere and manage business appointments, thus making the life of a person much easier than it was possible before. In this cut throat industry, many competitors can be seen fighting to make their products more competitive. Today the main players include Research In Motion (RIM) with their blackberry phones, Apple with iphones, Samsung, Nokia and HTC among many others. All of these industries are competing against each other to achieve maximum market share, but with the launch of every product, one either holds the attention of all the customers or with one glitch, loses all because of the highly competitive environment. So, the secret in the success lies in the effective marketing of the products along with necessary developments in the product so as to ensure that they are updated in accordance with the recent technological changes. In this paper the focus will be on the marketing strategy of Blackberry, as Blackberry is one of the giants of the industry especially in UK where it was declared to be UK’s no. 1 smartphone, despite of the recent troubles faced by the product’s managers Blackberry was still able to hit 8.5 million UK subscribers averaging a market share of 27.7 per cent. Worldwide the product was able to hold a customer base of 75 million by the end of Dec 2011 increasing its market share by 35 per cent as compared to the last year (Warman, The Telegraph, Jan 2012). Research in Motion, a global leader in wireless technologies, introduced Blackberry solutions in 1999 giving the mobile industry a very surprising twist. Blackberry services are used by million of customers throughout the world, to connect with people and contents of their lives that matter the most. The most competitive environment faced by Blackberry is provided by its rivals like Apple, and Samsung which will be analyzed in this paper to observe how their actions affect each other. For many years now, Blackberry has been in competition with Apple’s iPhones. Year after year it has launched products to compete with the latest products introduced by the company. Blackberry hadn’t faced any real challenge in the global market until Apple’s introduction of iPhones. Blackberry launched its ‘Blackberry Bold’ in response to the Apple’s iPhone 3G, which had already scored 1 million sales in its first week of launch despite the reported crashes of its computer system. Blackberry introduced many features in Blackberry Bold that were not yet incorporated in the iPhone 3G, like the download of Microsoft documents where as iPhone met the competition by providing increased built in memory (Swaine, The Telegraph, 2008). After the launch, users were double minded as to which phone should be picked, as iPhone provided more diversified user experience by not focusing mainly on the business elements like Blackberry (Beaumont & Warman, The Telegraph, 2008). After that with the passage of time, Apple seems to be increasing its customer base with every passing day. In 2010, Standard Chartered announced that it will be shifting its workforce from Blackberry to iPhones, as iPhones were providing services like remote wipe and remote lock; services that were vital for big businesses. By then, the IT analysts also realized the threat to Blackberry, as both Blackberry and iPhone were providing the necessary services to the business professionals while iPhone was also way ahead of Blackberry with respect to consumer experience (Skipworth, The Telegraph, 2010). By the end of 2010, Blackberry launched the ‘Blackberry messenger’ application in its mobile phones, captivating the attention of majority of the youth in UK, which increased it sales by 500,000 sets only in the month of December. This launch proved to be a very effective marketing technique for the company (O’Reily 2011). By 2011, Google’s Androids have also entered the market, which caused threats to not only Blackberry but the iPhones as well. By that time these three industries have totally crashed Nokia’s market with respect to revenue as well as profits. According to a survey conducted by an IT Research company IDC, by that time 47% of the phones sold in Western Europe were smart phones, where Google’s androids (28%) outnumbered both the iPhones (26%) and Blackberry (14%). Even though Blackberry was losing share all over the world, still it kept on scoring customer base in the UK. By mid June it had increased its market share exponentially to 22.3 per cent in UK which was only second to Android with their 45.2 per cent market share as iPhone stayed behind with an 18.3 per cent (Dunn, 2011). By the end of the year 2011, Blackberry’s growth was reported to be falling on a monthly basis. The company’s brand satisfaction fell by 8% in just a month. YouGov’s Survey, the Smartphone, Mobile Internet Experience study stated that the recent drawbacks in the Blackberry products’ performance were proving to be a threat to the product’s overall image especially since the market was being targeted by iPhones and Androids. At that time, it was projected that only 57 per cent of the existing users of the company will be staying loyal to the product (Warman, The Telegraph, Oct 2011). As a respond to such negative feedback, the company launched BBM music and new smartphones just after a month. The announcements were made by the company right after it claimed to have achieved a 40 per cent growth in its worldwide subscriber base, which increased its customer base to 165 million. That year Blackberry caught a larger customer base through its Blackberry messenger (BBM) service, as compared to the last year (Warman, The Telegraph, Nov 2011). Just a few days after the launch, the company was reported to suffer data failures which led to a knock out in the email service provided by the company for almost a week. Furthermore the Playbook, launched by Blackberry as a response to Apple’s iPads was blemished as non-competent because of the lack of email facility. Even after all the negative marketing the UK managing director Stephen Bates responded that the company was doing great and even announced a launch of few more products. Blackberry was also reported to be transferring from one software platform to another in the near future to provide its products a greater completive advantage (Warman, The Telegraph, Nov 2011). The effective marketing mix of any marketing strategy will comprise of detailed focus on product, price, promotion and placement. As an overall picture, the company is developing new models of cell phones and new versions of software for the Playbook. Besides that the company has focused on lowering the prices of its products to generate higher levels of sale. The company has devised many promotional techniques and it has been focusing on launching its products at high profiled places. These aspects are discussed in detail. According to the company’s financial results, the reported performance as well as its future planning, it seems like that the company is paying more attention to the sales of it Playbook rather than the chain of products that comprises of Blackberry phones. Furthermore the company has increased its expenses related to research and development and selling and marketing for the year 2012. Over the last two years even though Blackberry has been reported as the UK’s top Smartphone, still the company has been assigning a lot of resources to research and development and selling and marketing activities. As compared to the financial results reported by the company for the year ended 2010, the company had only allocated $280 million to research and development which increased to $1,351 million by the end of the year 2011. Even now, just only after the third quarter, the company has already spent $1,173 million in research and development. Through the financial statements, it seems like the expenses relating to selling, marketing and administration are following the same trend as that of the expenses relating to the research and development. In the year 2010, the company had only reported $412 million with regards to selling, marketing and distributing but by the end of the year 2011, that expense increased to $2,400 million, and now only after three quarters the company’s reported expenditure regarding selling, marketing and administration is 1,954 million and the year has not even ended yet. These financial results show that over the last two years, even though the company had reported sales in the UK, still it is allocating majority of its resources to increase its share in the global market. The company’s marketing efforts basically constitute of collaboration with its strategic partners and distribution channels as well as its own supporting staff and marketing teams to ensure the formulation of effective marketing techniques so that the company could achieve better results with respect to the sales of its products (RIM Financial Results FY2011, FY 2012). In its recent marketing approach regarding the Blackberry Playbook, the company is undertaking a very high level of promotional activities in the retail sector to ensure increased sales. According to the latest efforts made by the company, the Blackberry has reduced its prices for the Blackberry Playbook on all the stores, now all the Playbooks despite the size of internal memory (16GB, 32GB and 64GB) are available at the same price. By acquiring this approach the company’s intention was to decrease the price in order to increase the sales of the Playbook (The Telegraph, 04 Jan 2012). The loss in the decreased sales price was supposed to be eased after the launch of Playbook OS 2.0, but it was delayed. In order to mitigate the consequences arising through the delay in the launch of the updated version of the Blackberry Playbook OS 2.0 Software, which is designed to deliver new capabilities and mitigation, the company has planned to upgrade the enhanced software of the customers who had already purchased the new Blackberry Playbook at the original cost, for no additional charges. Such measures will soften the disappointment that the existing customers might be feeling, and it might lead to sustaining the loyalty in the product and its management. Besides that the company has recorded a provision in its financial statements with reference to the sale and maintenance of Blackberry Playbooks, to reflect the current market changes and to account for any improbabilities so that it could continue the designed aggressive promotional approach (RIM, Press Release, 2011). As a result of this positive promotion, RIM was able to sell 150,000 Playbooks into the channels by the end of the third quarter of the fiscal year and more sales are expected in the regions of United States of America and Canada. Furthermore the company has launched a Cost Optimization Program so that resources could be streamlined into more vital operations across the organization (RIM Financial Results FY 2012). Besides the efforts to promote Blackberry playbooks, the company decided to launch mobile phones codenamed ‘Colt’, ‘Milan’ and ‘London’. But then after reviewing the whole situation, the company has decided to launch and promote only one model named ‘London’. The company has made a decision to promote one product at a time for the foreseeable future so that the resources are not wasted, and thus they could be utilized in introducing one compatible product in the market (Warman, The Telegraph, 6 Jan 2012). According to the latest marketing strategy of the company, the company is planning to introduce its products at high profile places to capture maximum attention of its consumer base. Following this approach the company has decided to launch its new model of mobile phone, for the very first time, in February at the Mobile World Congress trade show that will take place in Barcelona. Besides that the company is planning to launch the new version of Playbook at the Consumer Electronics Show that will be happening in Las Vegas. Furthermore it has decreased the prices of its 7” to boost up its sales (Warman, The Telegraph, Jan 2012). After the radical change in the management board of the company in Jan 2012, which was the result of a long awaited shake-up, the company’s new chief executive of the company Thorsten Heins is planning to focus on the long term performance of the company which seems to be a wise decision (Simon and Taylor, 2012). Nonetheless his claims of the company being too innovative were not well received among the community of tech researchers, especially when the new CEO of the company claimed on the first video launched after his promotion that when the company starts innovation it innovates too much while they are developing a product (Douglas, The Telegraph, 2012). In the light of the recent performance of the company over the period of last two years, it is a good approach for the company to take a step back and focus on its products in a way that they should generate long term profits for the company by focusing on the quality of the products, the delays in the launches of the products result in loss of goodwill that the company holds with its customer base. Such loss on goodwill will result in loss of faith on the customer’s behalf. So if the customers will believe that their once favorite product will be back with new approach and will be more compatible with their needs, this will help the company in once again gaining the market share that it has lost because of its non stop launch of lower quality products. As the plans of Microsoft company leaked online which reported that the company was preparing a new generation of mobile phones known as ‘superphones’, for 2012 (Williams, The Telegraph, 2011), RIM is still focused on its existing products which are still not providing for its customer base properly. In the early 2012, despite of all the efforts, the company still faced loss in the market base in the United States of America. The company was facing the danger of take over after this dilemma, whose only workaround will be to reverse its decline in the biggest market (The Telegraph, 01 Jan 2012). Such targets can still be achieved by the new strategic approach acquired by the new chief executive officer of the company only if he focuses on the innovation of its products as much as he has faith in the company. Thosten Heins’s plans to launch the Blackberry 10 operating system with a bang for the existing customers, who are still stuck with the slower versions, can prove to be very effective. The product ‘Blackberry 7 operating system’ was launched in last August with not even a single television advertisement. This led to the failure of commitment on the company’s behalf to launch the product on time (Edgecliffe-Johnson, Jan 2012). Customers who are still stuck with the slower versions of the product are a proof of the loyalty that Blackberry’s customer base holds towards the product, as is evident by the exhibit launched by a tech enthusiast in Toronto in Feb 2012 (McInns, 2012). Even though there is a threat to the product through such measures taken by the product fans that may be they have regarded the product as a part of the cell phone history, still a high profile launch has become inevitable, it seems like to be the only way to increase product awareness among the customers so that they should know that the product and its individuality still exists and may be such actions by the company will lead to an increase in sales. Apple has gained even more increase in the market share according to the latest report. It has surpassed Samsung among all the other vendors like Sony Ericsson, LG, Motorola, Research in Motion and Nokia, with the launch of its latest iPhone in the fourth quarter of 2011 (Thomas, Feb 2012). It should be a concern for Blackberry, because even though it is suffering from the loss in sales over the last two years, still Blackberry has not been able to launch one successful product where as its successors are at a cut throat competition, gaining more and more market share with the every passing day. RIM had been able to maintain a competitive advantage in the UK markets if not globally. It was reported to be in lead consecutively, since the last two years by the company executives. But their latest claims have been totally disregarded as it was openly reported that Apple has acquired the top shelf in the cell phone industry in UK in 2011. RIM was even surpassed by Samsung (Arthur, The Guardian, 2012). Such reports can further jeopardize the future of the company. Customers and critics might feel that they have been lied to by the company authorities, as they so clearly claimed to have gained the top share in the UK markets in the beginning of Feb 2012 despite the fall in the US market shares, just in order to maintain a false impression of being the best at something if not nothing. The company should clearly set the record straight if it wants to maintain the goodwill with its consumers. Even the tech researchers have accepted the fact that if Blackberry will be bought now, it will mainly be because of the loyalty that the customers hold towards the product (Warman, Jan 2012). If the company will keep on deceiving the market by false claims then the customers will stop believing in it as well, and it is pretty conclusive that the company in its present condition can not risk that. Bibliography ZHENG, P., & NI, L. M. (2006). Smart phone and next generation mobile computing. Amsterdam, Elsevier WARMAN, M. 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The Telegraph, Analysis: BlackBerry needs to be bought, Press Release 23 Jan 2012, Available at: http://www.telegraph.co.uk/technology/blackberry/9032802/Analysis-BlackBerry-needs-to-be-bought.html Read More