How can BlackBerry lead the future of mobile messaging and revive its profit growth BlackBerry in recent news

In April 2011 Research in Motion (RIM) slashed its profits forecast citing increased competition from iPhone and Android handsets. Last week RIM announced that it had missed even its lowered expectations and reduced its profit forecasts. RIM shares closed down by 21.4% on the NASDAQ exchange in New York.

Jim Balsillie, joint chief executive of RIM blamed the poor performance on delayed product launch.

“The  slowdown  we  saw  in  the  first  quarter  is  continuing  into  Q2, and delays in new product introductions into the very late part of August is leading to a lower than expected outlook in the second quarter."

The company has announced a cost-cutting programme, which will include job cuts.

A concerned shareholder even wrote an open letter to RIM pointing out that the company was “sitting  on  $3  billion  of  cash,  no  debt,  and  still  wildly  profitable  with  expected  annual  cash flow of over  $4  billion.”  In  his  opinion  RIM  ought  to  invest  heavily  into  R&D,  marketing  and  execution  to  

catch up to the competitions – Apple and Android.

Analysts were quick to point out that, there  are  “no  short-term  fixes  to  improve  RIM’s  product  

portftolio,  brand  perception,  to  reinvigorate  share  gains,  revenue  growth  and  profitability”.

Part  of  RIM’s  long-term fix to regain lost market share and boost its profit margins should be a focus on recommendation marketing. Our cross market study of handset brands and the impact of earned media on profitability showed that word-of-mouth recommendations are strongly co-related to

profits of handset brands. It also revealed that not every customer is an active brand advocate.

Who is the most active brand advocate that BlackBerry needs to focus on? Is it the same customer segment across all markets? What are the underlying behavioural drivers of this customer segment?

BlackBerry’s  core  customer  segments

1. Emerging markets

While market share data might show BlackBerry faltering in the US and Western Europe, the story is much different in emerging markets like Indonesia, South Africa and India.

The BBC’s  recent  coverage  from  Indonesia reported: “As the joke in Indonesia goes, if you don't have the right gadget you may end up a social outcast. Undoubtedly, the gadget of the moment is the Blackberry smartphone.”  There are 3 million BlackBerry users in Indonesia. BlackBerry outsells the iPhone at a pace of 12-to-1 here. The driving force behind handset sales in Indonesia, as we identified in the 2011 mobileYouth report, is earned media. The same applies for BlackBerry as well.

While everyone from teenagers to parliament members in Indonesia own BlackBerry handsets, not all of them are actively involved in word-of-mouth. The most vocal advocates of BlackBerry in emerging markets of India, Indonesia and South Africa have been young female BlackBerry users in the 22-29  age  group.  This  is  BlackBerry’s core customer group. We call them Disruptive Divas.

Emerging economies that have experienced significant social change in the last 10-20 years boast of disruptive divas joining the workforce in an equal standing with their male counterparts for the first time  in  their  nation’s  history.  The  rise  of  female  working  class  had  driven  these  women  to  seek social currency among traditional tools of social status to proclaim their arrival into the establishment. BlackBerry handsets provide this social currency because have traditionally been the mobile phone of corporate executives and a symbol of arrival. So it is only natural that the divas prefer BlackBerry to an iPhone or Android handset.

2: Developed markets

In developed markets of the US and Western Europe, BlackBerry once again needs to bank on its history of being the preferred handset among corporate executives and government bureaucrats. However, the core customer segment that RIM needs to focus in these markets is 20+ female from ethnic minority groups.

While the online media in these markets gushes over the iPhone and Android devices, female social climbers from African American, Hispanic and Asian communities are pursuing BlackBerry handsets as a traditional symbol of the establishment to mark their arrival.

What should BlackBerry do?

BlackBerry already has active fans out there that recommend the product and are loyal to it. While it’s  BlackBerry’s  traditional  standing  as  a  symbol  of  the  establishment  that  influences  them  to  prefer  

the  handset  over  others,  it’s  the  BlackBerry  Messenger  (BBM) that makes them fall in love with the device and keeps them loyal to the brand.

Apple’s recent announcement of including the iMessage in iPhones does raise a threat for BlackBerry. The most fervent BBM users might not abandon BlackBerry. But those who they coaxed and converted to BlackBerry are more likely to switch. The most effective way to keep customers from jumping ship is to innovate.

BlackBerry needs to focus on innovating BBM to stay ahead of curve and be the brand that dictates the future of mobile messaging. BBM was the messaging application that turned BlackBerry into a global mobile powerhouse. Young people are already starting to move away from SMS and toward

The innovation approach that Blackberry needs to adopt is one of co-creation. This is where the brand advocates discussed earlier come in. Involving 20+ female BlackBerry users in the innovation process is the ideal way to guide innovation based on customer needs because they would not only be willing but would provide the richest customer insight into need gaps.

Summary

BlackBerry should not try and appeal to the youth demographic by engaging in clichéd youth marketing tactics of discounts, low priced products, celebrity endorsements or fancy jingles. Instead it needs to maintain its status as the aspirational traditional brand of the establishment. In the meantime, it needs to engage in co-creation with its core customer segment – 20+ females in emerging markets and 20+ ethnic females in developed markets – to further innovate BBM and lead the future of mobile messaging.

Contact mobileYouth

To find out more about the mobileYouth 2011 Report and how it can help you please send an email to josh.dhaliwal@mobileyouth.org

Josh Dhaliwal, Director

http://www.mobileYouth.org http://www.mobileYouthreport.com

UK: +44 20 3286 3635 North America: +1 646 867 3635 South Africa: + 27 11 08 3635 1 Asia: +852 8176 3650

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