GSM 5230

CONSUMER BEHAVIOR
Trimester 3 2009/2010

(Case J-BlackBerry)

GROUP 6
KUAN YEN NEE

(GM03698)

TUNG WAI CHEE

(GM03578)

YONG AI LEE

(GM03633)

CHEE JINQ SHYAN

(GM03528)

LECTURER : PROF. SAMSINAR BT MD SIDIN

CONTENT
1.0
2.0
3.0

Page
3
3
3
3
5

Case summary
Problem statement
Analysis
3.1 Analysis on Problem Statement 1
3.2 Analysis on Problem Statement 2
3.3
4.0

Analysis on Problem Statement 3

Recommendation

6
11

1.0

CASE SUMMARY

The case illustrated how BlackBerry, the mobile email device made by Research in Motion
(RIM) was conceptualize through its co-chief executive, Mike Lazaridis interest in science and
personal contact with communication technologies. When the BlackBerry (BB) debuted in
1999, carrying one was a hallmark of powerful executives and savvy technophiles of
organizations. People who purchased one either needed or wanted constant access to e-mail, a
calendar and a phone. RIM reported only 25,000 subscribers in that first year. But since then,
its popularity has skyrocketed in 2004 throughout the consumer market upon the additional
features like voice, color screens and international roaming. RIM was confident that the market
will continue to grow with more affordable Blackberry.

2.0 PROBLEM STATEMENT

The case presents this dilemma of RIMs future market penetration as such:
1. What is BBs consumer value proposition and to whom those value appeal to?
2. What are the assets RIM does not control but are necessary for BBs success? Should RIM
attempt to gain control of these assets?
3. Should RIM should push BB wireless handhelds deeper into the consumer market or
continue to focus primarily on corporate clientele?

3.0

ANALYSIS

3.1 ANALYSIS ON PROBLEM STATEMENT 1

Figure 1: Combo picture of BlackBerry 850 Wireless Handheld (left) and Palm VII (right)

The original hardware of BlackBerry 850 Wireless Handheld, which came out in 1999 was a
pager style device with a small screen and ran on a very slow Mobitex network. Despite some
limitations, the computer it soon became a hit gadget in Wall Street.
How RIM standout in the wireless e-mail arena amidst failure of many others including
Palm VII (a pen/touch based PDAs) by nailing the corporate users (for whom e-mail access
on the go was very important) value propositions are tabulated in Table 1 next page:
3

Consumer
Value

What RIM Did?

Proposition
E-mail

RIM just focused on email without trying to compete with Palm VII through a
full-fledged PDA style device.
Despite NTPs patent-infringement lawsuit, push e-mail had enables BB to stand
out from its competitors for a very long time. However, it causes addictive
Crackberry among consumers since they could read received e-mail in real
time and engage into an instant messaging style of dialog (using BB

Push E-mail

Messengers) with colleagues who are thousands of miles away.

Push e-mail also hide 2 important flaws of BB: (1) the latency of slow Mobitex
network through delivering of e-mail in the background and then have the
device notify user (giving the impression of instantaneous delivery); (2) short
battery life by minimize battery consumption since the device did not have to
use precious battery checking for e-mail at regular intervals.
With the success of Palm VII, an obvious choice would
have been a pen based input. However, RIM made the right
choice to go with a thumb style QWERTY keyboard
instead despite initial objections from RIMs salespeople.

Thumb Style

RIM reasoned that a pen is fine for small amounts of data

QWERTY

entry but consumer really need a keyboard to type even

Keyboard Input

short e-mails. Eventually, in 2002, even Palm abandoned

the pen with their model, Treo 90 (refer figure on the right).
Another key hardware innovation by RIM was the trackwheel, conveniently
located on the top right corner of BlackBerry 850. It made a quick and easy
navigation through the BBs menu.
Security is a key concern for any organizations information technology (IT)
department where RIM that deploy large number of BB throughout the

Bullet Proof

workforce. RIM forgoes simple POP or IMAP interfaces (which lacked security)

Security

to focused on building an enterprise server that provide end-to-end security

based on triple DES encryption. Over time, many administration features which
are useful, easy to control and manageable by IT staff are also being introduced.
RIM smartly introduces a $40 per month all-you-can-eat pricing model rather

All-You-Can-Eat
Pricing Model

than based on variable usage. This simple to understand and profitable model
encourages high usage and attracts the wireless carriers. Moreover, RIM utilized
data bandwidth very efficiently by downloading only portions of email or
attachments.

Table 1: BlackBerry 850 Wireless Handheld Consumer Value Proposition

4

3.2 ANALYSIS ON PROBLEM STATEMENT 2

Early success is never guarantee of long-term success. There are assets that RIM does not
control but are necessary for BBs success such as:
License Technology: Several Patents for Wireless E-Mail Technology
RIMs push e-mail, although much more complex, is deem similar to the patent hold by NTP
Incorporated. The patent dispute between them had delayed rollout of new BB models
causing a slight slowdown in RIM's rapid growth. In 2006, RIM paid a one-time payment of
$612.5 million for NTP license to the patents. Below is the press release of 3 March 2006:

"The licensing and settlement agreement relates to all patents owned and controlled by NTP
and covers all of RIM's products, services and technologies. NTP grants RIM an unfettered
right to continue its business, including its BlackBerry related business. The resolution
permits RIM and its partners to sell RIM products and services completely free and clear of
any claim by NTP, including any claims that NTP may have against wireless carriers,
channel partners, suppliers or customers in relation to RIM products or services, (including
BlackBerry Connect and Built-In technology), or in relation to third party products and
services, to the extent they are used in connection with RIM products and services."

BlackBerry Carriers Retailer

Unlike hand-held computers which are sold directly to end user (subscribers), the real
consumer for BlackBerry is wireless carriers such as T-Mobile in America. Subscribers'
choice in gadgets is limited to what their carrier offers. In most cases, they buy it directly
from their carrier or through retail channels. Hence, widespread carrier support is essential
for BlackBerrys success so that they treat BlackBerry as their priorities.

RIMs Control of Assets

RIM should and had attempted to gain control of the assets mentioned above by:
Licensed BlackBerry messaging software to a host of competitors (PalmSource, Nokia,
Motorola).
Widen its scope beyond e-mail to mobile offerings.
In 2004, RIM establish ties with 70 phone carriers around the world that offer
BlackBerry subscriptions to corporate customers and pay BlackBerry between $5 and
$10 per subscriber

3.3 ANALYSIS ON PROBLEM STATEMENT 3

Table 2: BBs Business Design Evolution (1998 present) Source: Blackberry.com, The Wall
Street Journal, Fortune, Business 2.0, Financial Times, Oliver Wyman Analysis Decision

Table 2 tabulated BBs business design evolution from 1998 to present. RIM penetrated deep
into the exploding personal users or consumer market in 2006 with the launch of Blackberry
Pearl (a Smartphone) in a bid to expand beyond its traditional business e-mail customer base
(refer Figure 2).
(Source: www.berryreporter.com)

Storm 2008
Feb 2007

May 2007
2006
2005

Figure 2: Selected BlackBerry Models for Business and Consumer Market Decision

To answer whether RIM should push BB wireless handhelds deeper into the consumer
market or continue to focus primarily on corporate clientele, 2 things need to be considered;
the current mobile demographic and the positive attitude among consumers towards BB.

Current Mobile Demographic

Nielsen Company reveals that on Q2 2009, consumers usage of smartphones is in this

sequence: business, mixed and personal.

Average yearly growth of potential consumers are 27.5% for business market (higher
among men than women) and 10% for consumer market respectively (refer Table 3).
Depending on market segment, consumer value different things for their mobile (refer
Table 4).
Market
Segments

Gender

Business

Male

(mainly Professional)

Female

Consumer (mainly High

Male

School / College Student)

Female

Age

Annual Income

Average Yearly Growth

($)

(%)
30

22-65

75,000
25

13-21

< 15,000

10

Table 3: Market Demographic for Mobile (Source: Modified from VersaPhone: Marketing Plan, 2008)

Market

Potential

Main Value

Functional and

Segments

Sales

Proposition

Style Focused

Business

High

e-mail

Efficiency / Profile

(mainly Professional)

Moderate

Consumer (mainly High

Low

entertainment and

Function

T-Mobile, Helio,

School / College Student)

Moderate

applications

Profile

Virgin

on the go

Efficiency / Style

Likely Carrier
AT&T, Verizon,
Sprint

Table 4: Market Demographic Value Proposition (Source: Modified from VersaPhone: Marketing Plan, 2008)

Positive Attitude among Consumers towards BB

Interestingly, every time RIM launch a model for the consumer market, the number of
subscribers impressively increased: 2006 (from 2 million in 2005 to 5 million), 2007 (12
million) and 2008 (14 million). At the same time, whenever RIM launches a model for the
business market, the brand index rise among adults aged 35 to 49 (YouGovs BrandIndex).
Other than that, characteristic such as Cultural, Social, Personal and Psychological (refer
Figure 3) do affect a Consumer Behavior Buying Decision. How those characteristic play a
part in developing positive attitudes among consumers towards BB are explain:

Figure 3: Characteristics affecting a Consumer Behavior Buying Decision

CULTURAL
Culture: worldwide mobile subscribers are more than fixed lines in 2008 and prediction that
smartphone like Blackberrry will overtake mobile in 2012.

Subculture: heavy usage of emails and internet (social media, push emails) and gamers.
Social class: conformity and respect (business market), entertainment and possessions
oriented, technically sophisticated (consumer market).
SOCIAL
Reference group: business associates, friend, salesman using AIDA, display or demo during
in-store experience, advertising and promotion.

 Family: recommendations by parents, siblings or relative.

roles and status: breadwinner or management level working parents, professional mobile
workers (business market), desk bound worker, student (consumer market)

PERSONAL
Age and lifecycle stage: 22-65 entering first or change job or promoted (business market).
13-21 entering high school or college (consumer market).
Occupation: mobile professionals (business market).
desk bound professionals and students (consumer market).
Economic situation: middle to high income (business market).
low to middle income (consumer market).
Lifestyle: Aspirer, Suceeder (business market).
Explorer, Reformer (consumer market).
(Source: Cross Cultural Consumer Characterization)
Personality and self concept: alert, well informed, productivity (business market).
approachable, hip and cool (consumer market).
(Source: BBs Branding Guidelines March 2007)

PSYCHOLOGICAL
Motivation: phones capabilities and brand (business market).
attractive, cool, sophisticated latest technologies (consumer market).

Perception: business tool (business market).

entertainment and communication (consumer market).
9

 Learning
behavior: top of the mind recall because of me-too product (equivalent to Apple Iphone
3G).
celebrity and politicians users (Paris Hilton, Lindsay Lohan, Nicole Richie, Madonna,
Barack Obama, Queen Elizabeth)
addiction to push email (Crackberry), can work and play using the same BB model with
its myriad features (refer figure below)
(Source: Rubin Consulting, 2009)

cognitive: BB Certification Programfree courses for customers in learning tricks and tips
that increase involvement through forging bonds and relationships with consumers
Beliefs and attitudes: email functionality is the most likeable features about BB (refer
figure below), alter consumers attitude and increase brand loyalty.

Through analysis, there is a huge potential market and positive attitude among consumers
towards BB both in the business and consumer market. Therefore it is only wiser for RIM to
further blur the lines between consumer device and business tool by pushing BB wireless
handhelds deeper into the consumer market while maintaining their corporate clientele (a mix
market).
10

4.0 RECOMMENDATIONS
In order to develop the marketing plan for a mix market, 2 things will be look upon; SWOT
Analysis on RIM (Table 5) and the Current Product Positioning of BB:
Strengths

Weaknesses

- comprehensive offering and portfolio

- dependence on few customers in the

- growing brand image and brand loyalty

business and government segments

- strong financial performance

- issues with product supply

- strong research and development (R&D)

- fastest growing company in the world
Opportunities

Threats

- current BB users stood at 25 million

- declining average selling price

(MarketWatch, 2009)

- increased competition in smartphone

- expanding portfolio of offerings and

segment

applications

- involvement in legal issues if not careful

- 70% of new subscribers for every quarter came

- upcoming models by competitors (e.g.

from non-enterprise which representing 50% of

HTC's Android, Apple Iphone 4G,

RIMs total subscriber base (MarketWatch, 2009)

Samsung Galaxy S, Motorola Droid,

- positive outlook for smartphones

Google Nexus One)

(forecast to rise 19% at 2011, overtake

mobile in 2012; increase 13% despite
economic crisis Datamonitor, 2009)
- Palm is in financial crisis (The Star, 14 April
2010)
Table 5: SWOT Analysis on RIM (Modified from Datamonitor, 2009)

Product Positioning
Iphone

Nokia

Blackberry

CONSUMER

ENTERPRISE

Traditionally, BB has been targeted to business professionals only. They were not priced or
developed for everyday cellular user. Nowadays, BB is still primarily targeted to business
professionals. The phone comes preloaded with mobile trial version of Microsoft Office, giving
the ability to edit documents directly on it and wireless connectivity on the go for faster paced
11

Internet connections when consumer needs it most.

BB has also attracted the younger generation with capturing style and function. For social
crowd, there is the auto focus 3.2 megapixel camera that doubles as a camcorder. Along with a
camera, there were preloaded a series of games and applications such as Facebook.
For both market, RIM has also launched a new software store called Blackberry App
World with hundreds of applications that target people of every sort.
Upon SWOT and potential areas in Product Positioning, these are the recommendations for
RIM to market BB:
Target Market
Early adopters, bloggers and technology review expert (that will translate sizzle and buzz
of new model to sales).
Loyal BB subscribers of mix market.
Product
Utilize R&D to pioneer a communication gadget beyond the generic Apples Iphone.
Allow consumer to personalize their BB through third party apps.
Offer handset with dual SIM card/line to easily switch between work and personal.
Continuous stress on function and style of handset (e.g. long battery life, assorted colour).
Maintain and improve on functional elegance of packaging (e.g. sponge to protect BB inside
the box).
Place
Control and influence global BB Carriers Retailer so that they place priority on RIMs
product.
Empower end user with the choice to purchase BB directly from RIM.
Advertising and Promotion
Product placement in global and regional movies and television program.
Repetitive integrated communication tools (IMC) to enhance BB brand equity and publicity.
Pricing
Affordable pricing strategy that do not jeopardize BB perception of quality among
consumers or the potential profit of RIM.

12