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Kyle Lippe, Arian Mirtaheri, and Samuel Slomowitz MKT 3300.007

Revitalizing BlackBerry Smartphones Introduction In 1984, Mike Lazaridis and Douglas Fregin founded Research in Motion (RIM), which is currently known as BlackBerry Ltd. RIM developed the first wireless data technology company in North America and eventually introduced the Internet-based e-mail interface in 2002. During 2005, BlackBerry won the Digital World Innovations Award, LAPTOP Magazine Editors Choice, Mobile PC Magazines Mobile Choice, and PC World 2005 World Class Award (Introduction). As reported by The Canadian Press, however, BlackBerry lost dominance as the leading smartphone maker after the 2007 launch of Apple's touchscreen iPhone (John Chen says, 2013). Gradually, BlackBerry began experience serious marketing problems. While worth $83 billion in 2008, BlackBerry was assess to be worth only $4.7 billion in 2013. John Chen, former Sybase CEO, is currently the interim CEO with the objective to turn around the company. His four objectives are to revitalize the mobile phone division, emphasis the enterprise systems in corporate networks, capitalize on the popular BlackBerry Messenger application, and continue offering software systems for industrial machines (John Chen says, 2013). BlackBerrys current corporate responsibility statement states, BlackBerry is a company driven by ideas. We believe that innovation and collaboration will foster sustainable growth for our business (Corporate Responsibility). This speaks to its mission and objective to provide mobile and wireless solutions to organizations and consumers. BlackBerry clearly emphasizes growth and determination for the future.

This paper studies the market problems BlackBerry faces in its smartphone segment. Decreasing customer loyalty, poor market share, and low revenue and profits are key areas that need to be addressed. The paper offers specific solutions that BlackBerry can use regain its place in the competitive smartphone market and revitalized its financial performance. Fixing Poor Customer Loyalty BlackBerry struggles to maintain strong customer loyalty. Customer loyalty is a buyers satisfaction with a product that compels that buyer to continue using that brand for a long period of time. It creates a long-term source of revenue and a source of word-of-mouth promotion of the product. Figure 1 shows that 53% of Blackberry users are likely to switch to other operating systems while only 20% of iPhone users are likely to switch. (Mace, 2010). In fact, BlackBerry suffered intensively when people expressed dissatisfaction with the BlackBerry devices provided by their employers. The Bring Your Own Device (BYOD) campaign enabled employees to switch to iPhones, Androids, and other mobile devices for business purposes (Knutson, Boulton, and Conners, 2013; Lee, 2013). Additionally, Figure 2 shows that new subscribers added per unit sold have been steadily decreasing since 2006. Mace (2010) argues that this trend indicates that most of BlackBerry subscribers are not because of new subscribers. Further, BlackBerry must sell two and a half devices to get a new customer (Mace, 2010). Because BlackBerry is very likely to lose customers to Apple, this presents a serious marketing problem. However, strong marketing from BlackBerry could to counteract the Bring Your Own Device campaign, allowing room to redevelop a strong customer base. The current fall of BlackBerry could be followed by a new revival. With a solid foundation of loyal customers, BlackBerry could gradually regain its status as a leader in smartphones and business solutions.

BlackBerry should develop more apps for video conferencing, managing documents, and organizing calendar events. As CEO John Chen begins his term to revitalize BlackBerry, the company should run a 9 month advertising campaign on TV starting January 2014. The commercials needs to raise awareness of the current utility and feature the BlackBerry offers. As consumers seek replacements of old phones, BlackBerry should be considers a viable and smart option. Promotions at the major telecommunication companys should offer affordable business plans that allow small businesses to effectively utilize BlackBerry smartphones. Gaining the respect of small businesses will provide a new source of customers and revenue. Further, BlackBerry should enhance its social media presence from 29.4 million followers on Facebook to 35 million followers by the end of the advertising campaign (facebook.com/BlackBerry). Similarly, Twitter followers should be increased from 3.7 million followers to 4 million followers by the end of the advertising campaign (twitter.com/BlackBerry). Both social media related goals can be achieved by ending the TV advertisement with Find us on Facebook and Twitter. Although millions of new customers most likely cannot be obtained in a short amount of time, the commercials will raise awareness of the brand and what it has to offer. As a result, BlackBerry can reassert itself in the marketplace and counteract previous shortcomings with a strong marketing message. Improving Low Market Share BlackBerrys market share was 4.6% as of May 2012 (Ganos, 2013). A few ways that BlackBerry can gain market share again is to try and add the Google Play store to the devices to help attract new customers from other carriers. Blackberry could add new features that competitors have, but with a BlackBerry spin. They can also offer promotions in order to entice people into purchasing their phones. The phone company can also try and develop a returning

customer base by making sure customer satisfaction is high. All these aspects will help BlackBerry gain satisfied customers and increase the companys market share. Capitalizing on the popularity of BlackBerry messenger (BBM) could serve as a key opportunity to increase market share. BlackBerry has over 60 million active customers monthly, and the majority use BBM an average of 90% per day. Customer send nearly 10 billion messages each day, nearly twice as many messages compared to any other mobile messaging application (BlackBerry Messenger to). BBM also includes group chat which lets you invite up to 30 friends to chat together, and share photos and schedules on your phone all in an instant. The messaging and video chat application can continue to develop and improve in order to appeal to consumers. Now available for iPhone and Android, BlackBerry can gain more followers from competitors. Enhancing the software, fixing bugs, and introducing new features could win back customers who abandoned BlackBerry previously. BlackBerry should continue to invest in BBMs secure service, protection of customer data, and private social network. Ultimately, BlackBerry can create a channel, so that brands could engage with BBM users in conversations to share thoughts, ideas and innovations. Business professionals are a key part of BlackBerrys success. In fact, BlackBerrys phone come preloaded with mobile trial version of Microsoft Office and now gives the ability to edit documents directly on your cell phone. To win back market share, BlackBerry needs to create a customer service network to help business professionals and build on enterprise systems and security platforms to meet the needs business management. Reestablishing a strong market share will help BlackBerry reached its financial and business goals. Increasing Revenue and Profit

Revenue per BlackBerry has decreased since the fourth quarter of 2009. Additionally, BlackBerry had 14,000,000 in revenue; but had only 2,000,000 in profits (Mace, 2010). Clearly, BlackBerry needs to increase total revenue. This is the case with all companies, but especially one that is lagging and potentially falling apart. There are many ways that this can be done, but one of the simplest ways is to better market the product. Marketing is the key behind most sales as it increases the customers awareness of the product and puts a positive light on the product. When both of these are done a customer is more likely to purchase the product than if you simply had it on the shelves. In the case of BlackBerry, the company needs to market less to the business crowd and more to the everyday user as well in order to capture some of the iPhone and Android device market share. As they are currently only marketing to the business people and losing that area, they are going to need to expand in order to stay afloat in todays marketplace. By offering new and improved products as well as offering special promotions for new customers the company will be able to make many more sales and grow its revenue substantially. Aside from attracting new customers through aggressive marketing campaigns, BlackBerry needs to focus on keeping its current customers. Currently, BlackBerry has one of the lowest market shares in the market, but it has to be able to hold onto what it already has in order to rebuild and grow. It can help retain these current customers by catering more to their needs and go above and beyond ordinary service. If a customer is unhappy then they need to address the problem, fix it, and compensate in some way. By doing this the customers problem is resolved and given compensation of some sort to make sure they know that the company is really willing to do what it takes to help the customer. By both retaining the current customer base that they have and by aggressively going after new customers with advertising campaigns

and promotions BlackBerry will be able to grow its revenue and start getting back into the smartphone market. On top of the growing revenue, BlackBerry will need to make more profit per sale than they currently are. Seeing that the profit margin per sale has been getting lower over the last years, this is one of the biggest fixes that can be done for the company. The margin can be increased by a couple methods such as: cutting production costs, getting more investors to invest in the company, and a higher sales price. In order to cut down on some of the production costs, BlackBerry should try to lower the labor costs on their products by either outsourcing labor or providing more in house production instead of paying more for the parts that they currently are purchasing. By getting more investors the company will be able to have more income for R&D which can provide them with the technology needed to produce their goods more efficiently. The third way that BlackBerry can increase their margin is to increase sales price. With an increase in sales price there is a larger margin per sale. The only way that this would work however is if the BlackBerry products were desired on a much higher level which can be achieved through the methods mentioned earlier. By following the steps listed above, we believe that BlackBerry can still succeed in the smartphone race. Again, BlackBerry is not currently selling as it is should and to fix this we suggest that they work to retain their current customers and then branch out their current marketing to include the more mainstream user of smartphones instead of only the business people. Once sales begin to rise again BlackBerry will need to raise their margin either by raising the sales price, cutting production costs, or increasing investment in the company by outside investors. These simple steps should be just what BlackBerry needs to get back into the smartphone marketplace.

Conclusion Loyalty is a big issue for BlackBerry, causing them to lose valuable subscribers. They need to improve customer relations with better phones, service, and apps. Such innovation can take the market by storm, revitalizing their marketing and performance. To increase market share, BlackBerry should improve current products with better features and apps than other smartphones. BlackBerry Messenger, the messaging and video chat app, can continue to develop and improve in order to appeal to consumers. Further, BlackBerry needs to target the working adult rather than the teenage and young adult population. To increase revenue, BlackBerry will need to increase total sales by keeping current customers happier in order to obtain the highest lifetime value of customers. In order to increase profits, Blackberry will need to increase efficiency to make a larger margin. This includes lowering costs, making contracts with businesses, and meeting targeted sales. Through effective marketing and better business practices, BlackBerry can meet its potential and achieve greater financial success.

Figure 1: OS Preference of People Planning to Replace Their Smartphones

Figure 2: New Subscribers Added Per Unit Sold for BlackBerry Smartphones

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