Any brand’s journey, from its humble beginnings to being recognized by consumers, and identified as something big (read: brand recognition), until it delves deeper into the consumer’s psyche. And voila! A compelling brand equity is born!
What unites great brands today – regardless os size – is their ability to understand customers’ needs, and delivering (or rather, tailoring…) the right solutions through their product or service. This means taking into consideration the local culture that affects habits, buying patterns, usage… practically everything!
Blackberry is one such brand. But it wasn’t always that way. One of Blackberry’s greatest growth story came from Indonesia, a country that adopted Blackberry so fast that the Canadian company couldn’t even put a finger on the exact reason. But it knew that the smartphone that was originally designed for business people and professionals, turned into the mobile phone of choice for the urban masses.
“Indonesia, one of the world’s hottest mobile phone markets with a population of 240 million”. “RIM has sold 1.2 million BlackBerrys in Indonesia, which totals more than the combined number of iPhones and Google Androids” by a large margin. The key success factors in Indonesia stem from two advantages: 1) their first mover strategy and 2) their ability to take advantage of developing nations’ broadband limitations.” BlackBerry Report, 2010
Had BlackBerry paid better attention, they would’ve realized that Indonesia has had a reputation as hotbed for new technology acceptance. Nokia often used Indonesia for its Country Launch… (Nokia who?)
“The wireless communications industry is characterized by rapid technological change, evolving industry standards, frequent new product introductions and short product life cycles” . In this challenging industry, Research in Motion Ltd (RIM) has consistently shown growth in terms of sales volume and revenue . RIM is engaged in the research, design, manufacture, and sale of wireless solutions, primarily the BlackBerry wireless devices and e-mail services .
With increasing competition from products such as Apple’s iPhone and Google’s Android, RIM intends to foster future growth through continued innovation and expansion of their consumer base . RIM has had success through international expansion, such as in Indonesia, and also intends to branch out to new customer segments beyond their traditional company focus while staying true to their core competencies.
Although there has been recent media coverage of governments threatening to ban BlackBerry products, the ban actually highlights one of RIM’s selling points: unbeatable security. RIM has a number of competitive advantages, including: secure e-mail and online transactions, lower bandwidth usage, and BlackBerry to BlackBerry global instant messaging capabilities .
According to their 2010 Annual Information Report, RIM’s current strategy involves expanding the customer base using opportunities in under access market segments.
Customer Expansion: The Future is Low-Bandwidth and Emerging Markets
The smartphone industry is becoming increasingly competitive as consumers demand one mobile device to manage all types of information. Both RIM and Apple aim to become the provider of choice for such a device, along with other well-established mobile phone suppliers, such as Nokia, Samsung, and Google .
Expanding the consumer base with this increased competition, will not be an easy task, especially since RIM has traditionally focused solely on the enterprise business consumer. With enterprise market saturation in the developed world and increasing competition both locally and globally, we believe RIM must focus on international growth – including enterprise users, small to mid-sized businesses (SMBs) and consumers in emerging markets.
In general, multinational corporations are interested in focusing on global consumers as it can be costly and cumbersome to modify products, services, and communications to suit local tastes. For example, Apple offers the iPhone and its apps globally with little localization. This gives local companies an advantage as they focus on those individuals who want global products at local prices or more customized solutions for their needs .
While RIM has traditionally focused on enterprise business solutions, their market expansion success in Indonesia shows they are well equipped to localize their global offerings – something competitors cannot offer as easily or as well.
One challenge with focusing on other market segments is that mass-market consumers are more influenced by price than are early adopters. But RIM is already well positioned for this challenge as it offers a wide range of devices that are highly subsidized by wireless operators. Verizon Wireless offers a buy-one-get-one free program for BlackBerry devices . This price competitiveness is another strength allowing RIM to “think globally and act locally.”
So, how should RIM expand within this competitive landscape? Its current strategic course does not need to be markedly changed; rather they should gradually move towards expanded market identification and acquisition. Perhaps most important, the strategic choices that RIM makes must keep intact the company’s core heritage as it relates to enterprise consumers and partnership development .
RIM has demonstrated success in building its customer base through international expansion. For future expansion, however, we believe RIM should focus on countries with low bandwidth availability, areas where their offerings and judicious use of bandwidth would align with local needs while still serving the global customer.
Competitive Advantages Strengthen International Market Expansion
International expansion is one example of a progressive and innovative way for a company to grow using their existing product line portfolios and core assets. In quotation of a 2006 HBR article, RIM can latch on to the ideology that typically, “well-managed companies [will] spread their wings over time and enter many geographic markets” .
RIM has well-known brand names and sophisticated technologies, which meet the needs of target consumers and newly identified demand categories in global markets.
As identified in the RIM 2010 Annual report, the company has “an increasing number of significant global carrier partner customers” and has “added over 75 new carrier and distribution channel relationships for a total of approximately 550 carriers and distribution channels in 175 countries” in fiscal 2010 . With an intensified demand for RIM products on an international scale, there are growth opportunities in the basic stream of device sales. For example, the forecasted penetration rates in South America and Europe are likely to equal that of the United States within a few years .
RIM’s smartphones have been a solid success in “Indonesia, one of the world’s hottest mobile phone markets with a population of 240 million” . According to Edleman, “RIM has sold 1.2 million BlackBerrys in Indonesia , which totals more than the combined number of iPhones and Google Androids”  by a large margin. The key success factors in Indonesia stem from two advantages: 1) their first mover strategy and 2) their ability to take advantage of developing nations’ broadband limitations.
RIM has worked to perfect bandwidth efficiency such that bandwidth usage originating from BlackBerry devices is ten times less than that of an iPhone . Therefore, RIM can be successful in areas where there are more congested bandwidth markets and limited internet access, as seen in the case of Indonesia. In contrast, Japan demonstrates a market with much greater bandwidth and internet availability, such that research suggests that RIM is less successful in that market . As a result, we recommend focus be placed on expansion into countries with limited bandwidth, such as China.
In China, the BlackBerry is currently only available through China Mobile, the mobile market leader. China Telecom is expected to also start offering the BlackBerry, but only to corporate customers. This approach should allow RIM to create inroads with reliable markets that exist in China.
China Mobile is preparing to distribute the device to small and medium enterprises as well as individuals, which could mean exponential opportunities for growth, assuming consumers react similarly to the more proven Western markets . Although intellectual property rights are a concern, RIM has found a successful approach by adapting to local environments.
Recent concerns have surfaced with the threatened banning of the BlackBerry messaging and email services in the United Arab Emirates . The competitive advantage RIM holds in security is currently under threat by governments such as the UAE, India, Saudi Arabia, and China who wish to gain access to their citizens’ communications for national security reasons .
According to the RIM 2010 Annual Information Report, RIM’s current strategy involves expanding the customer base using opportunities in under access market segments. Therefore, RIM will need to come up with a solution to address their concerns if it wishes to remain viable in these countries.
Our recommendation would be that RIM continues to work with these governments to develop a solution that is acceptable to both parties; one that will allow access for criminal investigations but not compromise the integrity of secure business communications. This will allow RIM to adapt to local market needs and demands while satisfying locally-based global (“glocal”) customers. It is also important to point out that the recent troubles in the Middle East have resulted from the BlackBerry security features literally being too good in securing data, which may eventually act as an inspiration rather than a defeat.
Leveraging Competitive Strengths to Expand in Prosumer and SMB Market Segments
The wireless communications industry is comprised of three distinct segments: 1) Consumer markets where products are purchased by end users for personal use, 2) Prosumer markets where products are purchased by end users for business and some personal use and 3) Enterprise markets where IT or management purchases products for deployment to employees” . RIM has traditionally focused on the enterprise segment, which primarily consist of business consumers and their wireless device needs. According to the RIM 2010 Annual Information Report, RIM’s current strategy involves expanding the customer base as well as “extending BlackBerry’s reach into the prosumer and consumer market” .
By focusing on those consumers interested in business functionality, RIM can stay in alignment with its core competencies while expanding its customer base to include prosumers. Small business owners can also be targeted as their functionality requirements are met by the existing BlackBerry product lines.
SMBs comprise a huge untapped market potential for RIM. In the U.S., small businesses employ roughly half the private labor force of 153 million people . “SMBs account for 90% of the world’s workforce and almost half of its gross domestic product,” according to Access Markets International .
RIM products offer secure email connections, which are important for businesses because they ensure company communications will remain secure and within the company. RIM also allows for secure online transactions, such as online purchases for business needs. In addition, Hewlett Packard recently announced development of software that lets users wirelessly print documents from their BlackBerrys . Clearly, by targeting prosumers, and more specifically, small business owners, there is a strategic fit with the RIM’s existing competitive advantages.
Strong Future Outlook for RIM
RIM has several competitive advantages in the mobile smartphone market space, founded primarily in their ability to harness superior security features and take advantage of lower bandwidth usage and availability . RIM has been successful in developing business solutions for enterprise customers, and intends to continue growing their solutions offerings through international prosumer market expansions.
Additionally, RIM has demonstrated their ability to successfully navigate several challenges inherent to international expansion (e.g. protecting intellectual property rights). With recent concerns from international governments over the RIM’s security features being too good, RIM should also adapt to local consumer needs by developing customized solutions to support future high-level partnerships without losing the market space altogether. For the most part, the future growth outlook and competitive advantages of RIM indicate a positive future even in an arguably challenging competitive landscape.
Inspiration: Forbes India