Introduction
The contemporary world is dominated by technological innovations, which have led to introduction of sophisticated electronic goods. At present, many individuals are seeking technological solutions to their social and economic challenges. For example, there is a high demand for reliable and cheap communication systems. Indeed, many companies and individuals have benefited significantly from the rapid introduction of superior phones equipped with user-friendly applications (William, 2007).
Nonetheless, the high demand for sophisticated electronics such as smartphones, laptops and tablets has compelled many electronic companies to improve their products. Therefore, the need to dominate the handset industry through production of affordable and sophisticated phones is currently one of serious challenges many electronic companies are facing (Jesdanun, 2012). Blackberry is one of the dominant producers of smartphones, but its market share is shrinking due to stiff competition from its rivals (Jesdanun, 2012). This paper discusses the marketing challenges of Blackberry and proposes measures to improve its marketing strategies.
Background of the Company
Research In Motion (RIM) is today one of the largest electronic firms internationally. “A renowned entrepreneur called Mike Lazaridiz founded RIM in 1984” (William, 2007). “RIM is based in Waterloo, Ontario and has gradually extended it presence to several parts of the world including the US, Europe, Middle East and Asia Pacific” (William, 2007). In the 1980s, RIM became popular for being research oriented; hence, it was dubbed “Research In Motion” (William, 2007).
Since the 1980s, this company has gradually diversified and improved its products and services. In 1992, RIM invented a sophisticated pager machine. In 1999, RIM rose to fame in the phone industry when it introduced the Blackberry handset. Currently, “RIM produces internet hardware, computer programs, smartphones and tablets” (William, 2007). In addition to revenues derived from selling these products and services, this company generates income from network services (Larissa & Andrew, 2013). In the past few years, RIM has gained a high international market reputation for producing superior services and products. However, its business fortunes have begun to deteriorate because it is facing numerous challenges in producing and marketing smartphones (Jesdanun, 2012). Therefore, it is important to analyze the challenges that have truncated the growth of Blackberry in the past few years.
Marketing Challenges of Blackberry
Until 2009, RIM dominated the telecommunications market because it produced unique products and services. Moreover, its branding, sales and marketing techniques were effective. Currently, Blackberry smartphone, which led to the rapid growth of RIM, is facing serious market competition from rival companies. Indeed, “other producers of smartphones such as Apple, Nokia and Samsung have overtaken Blackberry smartphones in the market” (McLean, 2009). In the US, the market segment of Blackberry has gone down considerable in the last few years. For instance, in 2009 when Blackberry was thriving, it commanded fifty percent of the market segment (Larissa & Andrew, 2013). Globally, Blackberry controlled approximately 44 percent of the market share in 2009 (Larissa & Andrew, 2013).
This success was obtained through production of superior smartphones, which could easily access internet in remote areas (Larissa & Andrew, 2013). A part from its multiple applications, its unique branding enticed thousands of high-end consumers globally. Thus, Blackberry handsets became popular in the corporate world since many companies enjoyed their distinctive features. However, its market share in the US went down significantly to about 5.9 percent in 2013 and the same level of decline was witnessed in other markets (Larissa & Andrew, 2013). This sharp decline in the market value of Blackberry occurred despite serious efforts to salvage its reputation in the market (Jesdanun, 2012). Therefore, the significant drop in the demand for Blackberry has left it in a precarious position. The following factors have accounted for the sharp decline in the profitability Blackberry.
Stiff Competition
Competition among handset producers is multifaceted since they all have unique strategies. As mentioned before, many companies have penetrated the handset industry and they are keen to outshine each other in the market. Moreover, international markets are currently overcrowded with smartphones; thus, only innovative companies are able to thrive. These two developments have compelled manufacturers of handsets to reorganize their branding and marketing strategies (Larissa & Andrew, 2013). Before the rise of Apple and Samsung smartphones, Blackberry did not face serious rivalry in the market since its competitors were not keen on producing smartphones (McLean, 2009). However, Blackberry lost its immunity against competition when other companies began inventing smartphones (Larissa & Andrew, 2013).
Production of Unique Products
Blackberry did not observe market trends keenly. It simply targeted high-end consumers. Conversely, its competitors like Samsung and Apple exploited this loophole, targeted the wider market and produced relatively better handsets. For example, Samsung and Apple have introduced touch screen handsets, which are more superior to many Blackberry handsets (McLean, 2009). Moreover, these companies regularly add extra features in their new products to make them competitive in the market (Larissa & Andrew, 2013). For example, Samsung has been improving its smartphones regularly to entice customers.
Recently, Samsung launched its S4 smartphone, which was quickly followed by S5 series. Principally, regular improvement of handsets has enabled Samsung to gain more access to the market compared to its rivals. Unlike its competitors, Blackberry has lagged behind in the production of better handsets. Thus, Blackberry has gradually lost its market segment. Therefore, the underlying reason for its failure in the market has been the regular introduction of better smartphones by its rivals (Larissa & Andrew, 2013). Moreover, other companies have focused on producing smartphones for all categories of consumers.
Lack of Product Diversification
RIM has not been producing a variety of products. On the other hand, companies such as Samsung and Apple have been producing many electronics such as computers, home appliances as well as smartphones (Larissa & Andrew, 2013). For example, Samsung has introduced a smart television, which is now arguably the best in the market. This means that Samsung has been making huge profits from smartphones and other electronics, but Blackberry only relies on smartphones (William, 2007).
Diversification of products is important because of several reasons. First, diversification of products enables a company to generate a lot of revenue by selling a variety of products. Second, it enables a company to remain competitive in the market when some of its products lose market value (Grewal & Levy, 2012). Third, diversification of products can reduce the cost of distribution and marketing (William, 2007). For example, Samsung can easily market many of its products in one advertisement. Moreover, the success of one product can lead to the success of others in the market (William, 2007). For example, a consumer who likes a Samsung handset is likely to buy a Samsung tablet because many consumers tend to generalize the quality of a company’s products.
Pricing of Products
Most Blackberry handsets are very expensive; hence, many consumers cannot afford them. On the other hand, companies such as Nokia and Samsung have better smartphones, which are cheaper than most Blackberry handsets. Therefore, many customers that formerly bought Blackberry products have now shifted to buying smartphones from other companies (McLean, 2009). Indeed, some tablets are arguably better and cheaper than some Blackberry items; hence, they attract more consumers. Therefore, the “price war” is another dimension to the stiff competition Blackberry is facing against its rivals (Larissa & Andrew, 2013).
High Operating Costs
It has been difficult for Blackberry to scale down its prices because it has high operating costs. Blackberry produces most of its products in developed countries where the cost of labor is expensive; hence, its products are costly. On the other hand, companies such as Nokia and Samsung have significantly mitigated their production expenses by producing most of their products in developing countries such as China, South Korea and India, where the cost of labor is cheap. Thus, Samsung and Nokia have been able to produce affordable smartphones; hence, they have overtaken Blackberry. In addition, “Apple, which is one of Blackberry’s major competitors, reached a non-exclusive deal with China Unicom, the second largest carrier in China, to distribute the IPhone (McLean, 2009). Moreover, “in the USA, AT&T currently holds exclusive rights to distribute the IPhone” (McLean, 2009).
Poor Marketing Strategies
Marketing of products is important because it can dramatically increase the sales volume of a product with low demand (William, 2007). When Blackberry smartphone dominated the market, its success was attributed to its unique quality not proper marketing strategies. In other words, Blackberry handsets advertised themselves since they had sophisticated features and numerous applications, which attracted customers (Larissa & Andrew, 2013). Thus, for a long time, Blackberry performed well in the market despite lack of a clear-cut marketing strategy. Undeniably, “RIM not only stopped producing new Blackberries while focusing on its playbook, it stopped chatting with its customers about them for an extended period” (Larissa & Andrew, 2013). Thus, when other companies introduced superior smartphones, many consumers forgot about Blackberry handsets because they were not advertised.
In addition, when competitors of Blackberry began producing smartphones, they heavily invested in dynamic advertisement techniques to familiarize consumers with their products. For instance, advertisements of both Nokia and Samsung handsets have been common in the social media. On the other hand, Blackberry abandoned sales promotion and wasted a lot of time trying to invent tablets and playbooks, which already existed in the market. In fact, Blackberry’s advertisements have been absent in most media platforms; hence, many consumers are oblivious of new Blackberry products. Currently, Blackberry is planning to create a centralized marketing system to cut down expenses and improve its market segment. At present, centralized marketing system might not work well for Blackberry because it has significantly lost popularity. In addition, each market has unique trends, which cannot be dealt with effectively through a centralized marketing system (Jesdanun, 2012).
The Most Significant Marketing Challenge of Blackberry
From the foregoing discussion, it is evident that Blackberry is facing myriad challenges in the handset business. The main challenge Blackberry is facing is the slow pace at which it is introducing better smartphones. In simple terms, RIM is losing focus on innovation, which has often been its core value. Indeed, it is ironical that RIM, the founder smartphones, is now lagging behind in producing them. Therefore, the slow pace of innovation is the main challenge Blackberry is facing because introduction of new handsets or improvement of the existing ones is the main survival tactic in the phone industry.
Moreover, many consumers previously bought Blackberry products because they were the best in the market. Therefore, since other companies are now offering affordable smart phones with more applications, consumers have no reason to buy expensive and outdated Blackberry products (McLean, 2009). Consequently, Blackberry cannot succeed if it continues to ignore creativity, which made it rise to fame (Larissa & Andrew, 2013). It is worth noting that creativity is fundamental to success in any business activity; thus, Blackberry must produce new products to remain relevant in business.
Three Strategies to Improve Marketing of Blackberry’s Products
Blackberry should reduce its cost of production and distribution to make its new products affordable to many consumers. “If Blackberry reduces the cost of its handsets, it will access a wider market” (Larissa & Andrew, 2013). The cost of distribution can be reduced by forming partnerships with dominant carrier companies. “Intensified distribution and sales promotion will attract more targeted consumers” (Jesdanun, 2012). Production costs can be mitigated by producing many products in countries with cheap labor.
In the process of introducing new products, Blackberry should transform its marketing strategies to facilitate marketing of its new handsets. Apart from Blackberry, Nokia is also trying to recover from its losses after failing to produce better phones. At present, the new Nokia Lumia smartphone is seriously being advertised in social media to make it penetrate the market. Therefore, Blackberry can follow Nokia’s footsteps if it wants to succeed (Larissa & Andrew, 2013).
Blackberry should carryout regular market research to enable it understand the current consumer demands (Grewal & Levy, 2012). Market research will enable Blackberry to produce relevant products that are highly demanded. Market research will enable Blackberry to avoid duplicating products and services, which are already being offered by other companies. Moreover, market research will enable Blackberry to develop evidence based marketing strategies. Last, market research will enable Blackberry to identify its real customers because it does not seem to know them; hence, it cannot satisfy their demands effectively. Once Blackberry has identified its clients, it should regularly advertise its products to them (William, 2007).
The Best Solution to the Marketing challenges of Blackberry
The best solution to the current challenges facing Blackberry is to produce better handsets than those produced by its rivals (Larissa & Andrew, 2013). For instance, Blackberry can introduce new phones with better features. Regular production of better smartphones will make Blackberry competitive in the market. Thus, Blackberry should channel most of its resources towards improving its smartphones because spending much money in advertising obsolete products is meaningless and will lead to more losses (William, 2007).
A part from introducing new smartphones, Blackberry should diversify its products to enable it generate more revenue. For example, Blackberry can produce sophisticated versions of ordinary electronics such as laptops, tablets and home appliances (William, 2007). Nonetheless, much attention should be given to the Blackberry handset because the company has had a good experience with it. Furthermore, it is easier for Blackberry to improve on its strengths than flaws.
New Blackberry products should be more user friendly than the current ones, which are complicated (Larissa & Andrew, 2013). In addition, new products should target markets in both developed and third world countries to enable the company make more profits (William, 2007). In other words, Blackberry should not ignore African markets because they also have high-end consumers looking for superior products and services.
Advantages of this Strategy
Although Blackberry has a good reputation for producing genuine items, its market share can increase exponentially if it produces new products, which will attract new customers. By selling new products internationally, Blackberry will get a high stock turnover. Interestingly, RIM has already established a good consumer base, which will enable it to sell new handsets easily (Larissa & Andrew, 2013).
Disadvantages of this Strategy
Introduction of new items will need serious investment in research and distribution (Grewal & Levy, 2012). In addition, failure to produce better products can seriously water down the reputation of Blackberry in the market. For example, “if Blackberry makes an inferior phone, it will alienate its consumers because they will lose trust in the handsets” (Larissa & Andrew, 2013).
Conclusion
In the last few years, Blackberry was a success story in the domain of telecommunications and many corporate heads and government leaders enjoyed the convenience and security of its products. Unfortunately, Blackberry is today hitting news headlines with bad stories of serious market failure and decline in profits. Moreover, many corporate leaders are no longer interested in buying Blackberry items. Instead, they are thinking of new strategies to revitalize Blackberry. This essay has revealed that Blackberry has lost its market value because of several weaknesses. Despite the decline in the profitability of Blackberry, it can still recover from its losses by developing and implementing good business strategies.
It is evident from this discussion that Blackberry has two significant weaknesses, which it needs to solve as soon as possible to enable it recover from its losses. First, Blackberry should implement a proactive innovation strategy that will enable it to produce better products. In other words, Blackberry should create new items within the shortest time possible because its rivals are also proactive in creating new products. Moreover, it should adopt diversification of products to enable it get a lot of income. Second, Blackberry should develop and implement an effective sales and marketing plan to enable it increase its sales volume in the international markets.
Last, Blackberry should reduce its cost of production to enable it produce affordable products that can be accessed by many consumers. One of the opportunities that Blackberry can exploit is the good customer loyalty it has earned in the past few years. Therefore, it can easily get more customers once it produces new products. It is worth noting that the challenges Blackberry is facing have previously affected some of its competitors such as Nokia, but they have managed to recover from their losses through adoption of good strategies. Therefore, Blackberry can also regain its lost business success by adopting good strategies.
References
Grewal, D., & Levy, M. (2012). Marketing. New York, NY: McGraw-Hill. Web.
Jesdanun, A. (2012). Blackberry marketing head undeterred by share loss. Web.
Larissa, B., & Andrew, B. (2013). Integrated marketing communications plan: Blackberry Q10. Web.
McLean, P. (2009). Canalys: iPhone outsold all Windows mobile phones in Q2 2009. Web.
William, P. (2007). Basic marketing: A global-managerial approach. New York, NY: McGraw-Hill. Web.