blackberry consumer preferences and segmentation

Reclaiming the SmartPhone Market

M. Brent EasonBen FurrCarrie MartinelliAdam Scott

RIM Confidential

▪ Founded in 1984

▪ First BlackBerry launched in 1999

▪ 2009 Revenue: $11.1 billion

▪ 2009 Net Income: $1.89 billion

▪ Employees: 12,000

BUSINESS INFORMATION

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TARGET MARKET

PROSUMERS

▪ Non-business user

▪ RIM BIS Application – Customers are given access to an email

account comparable in speed/features as BES is for enterprise users

▪ Feature based segment – fast email, text, MMS, web browsing

and BB exclusive PIN to PIN messaging (very fast and secure)

▪ BlackBerry has 20% of the current smartphone market share and

losing ground in this customer segment

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KEY COMPETITORS

▪ Strong competitor in the prosumer customer segment – 15% of current smartphone market share

▪ Advantages: Brand awareness and variety of application downloads

▪ Disadvantages: Price point and limited to AT&T GSM network

▪ Low cost OS with open development

▪ Advantages: Scalable and flexible – functions on a variety of smartphones

▪ Disadvantages: Low adoption and low number of available apps (both arerapidly increasing)

▪ Overall, serious threat to both the iPhone and BlackBerry in the next 12-16 Months

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MARKETING PROBLEMS

LAGGING MARKET KNOWLEDGE▪ Evolution of smartphone customer segmentation

(i.e. business users » personal users)

LAGGING R&D EFFORTS▪ Rapidly shifting consumer preferences and higher expectations

(i.e. mass customization) require greater feature offerings and speed to market

BUSINESS IMPLICATIONS▪ Targeting and Positioning, Product Development, Pricing & Promotion

▪ Bottom Line: Sales, Profit, and Market Share

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RESEARCH STRATEGY

OBJECTIVECarefully analyze customer preferences and characteristics in order to

better define customer segments, determine which customers to focus

marketing efforts on, and what features are most important to those

customers.

PRIMARY DATA▪ Exploratory Survey: “How Smart is Your Phone?”

▪ Follow-up Survey

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RESEARCH STRATEGY

ADVERTISE!

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RESEARCH METHOD

COLLECTED SURVEY DATA www.surveymonkey.com

▪ 346 of 421 Respondents completed survey end to end▪ 73 Respondents excluded – did not pass eligibility check, therefore not

in the Prosumer market▪ 2 Respondents did not finish the rest of the survey and were excluded

SURVEY LIMITATIONS▪ Time Constraint - Sampling was not a perfect representation,

could have been larger ▪ Survey Length - 24 questions, would’ve liked more to capture more

critical data but there were concerns about the impact on participation

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SURVEY STRUCTURE Eligibility Check

Information About Existing Phone

DEPENDENT VARIABLE ▪ How likely are you to make your next phone a BlackBerry?

INDEPENDENT VARIABLES ▪ Usage Information

▪ Feature Preferences

General Phone Preferences

Demographic Information

▪ Demographics

▪ Psychographics

DATA COLLECTED

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SAMPLE DEMOGRAPHIC PROFILE

Female 46.2% 160

Male 53.8% 186

GENDER

18-24 3.2% 11

25-29 23.1% 80

30-34 27.5% 95

35-39 14.2% 49

40-44 10.1% 35

45-49 3.8% 13

50-54 8.1% 28

55+ 10.1% 35

AGE

Yes 70.2% 243

No 29.8% 103

MARITAL STATUS

Did not graduate high school 0.0% 0

High School Diploma 0.3% 1

Technical school or some college 2.9% 10

2-year college degree 2.6% 9

4-year college degree 47.1% 163

Masters 42.5% 147

PhD 4.6% 16

EDUCATIONYes 48.6% 168

No 51.4% 178

CHILDREN

1 15.0% 52

2 43.1% 149

3 18.8% 65

4 19.7% 68

5 2.9% 10

More than 5 0.6% 2

# HH MEMBERS

Urban 25.1% 87

Suburban 64.7% 224

Rural 10.1% 35

RESIDENTIAL TYPE

Full-time student 3.2% 11

Engineering 6.9% 24

Construction/Physical labor 1.4% 5

Information Technology 16.2% 56

Medical/Health Services 4.3% 15

Sales/Marketing 12.1% 42

Financial Services 11.8% 41

Education 6.6% 23

Retail/Hospitality 2.0% 7

Public/Emergency Services 0.0% 0

Artist/Musician/Designer 0.6% 2

Science/Biotechnology 7.5% 26

Government/Legal 5.8% 20

Self-Employed/Consultant 4.3% 15

Media/Journalism 0.3% 1

Non-Profit/Social Services 2.0% 7

Homemaker 2.6% 9

Retired 0.9% 3

Unemployed 1.4% 5

Other 9.8% 34

OCCUPATION

less than $50,000 10.1% 35

$50,000 - <$75,000 16.5% 57

$75,000 - <$100,000 15.9% 55

$100,000 - <$125,000 14.7% 51

$125,000 - <$150,000 9.8% 34

$150,000 - $200,000 13.9% 48

More than $200,000 6.4% 22

Prefer not to say 12.7% 44

HH INCOME

▪ All 346 Respondents▪ Satisfactory Spread, Very close to Prosumer profile

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ANALYSIS METHODS

REGRESSION ANALYSIS▪ Identify significant factors affecting smart

phone choice

CLUSTER ANALYSIS▪ Identify meaningful customer segments

DISCRIMINANT ANALYSIS▪ Profile each segment demographically

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STEPWISE REGRESSION

Q#7 - Please choose how often you currently use the following features of your CURRENT CELL PHONE on a scale of 1-7:

Parameter Estimate

P-Value Tolerance

Frequency of use of Calendar/Reminders

0.10564 0.0032 0.60985

Frequency of use of Free Add-on Games or Apps

-0.09581 0.02 0.53927

Frequency of use of Music Playback

-0.21721 <.0001 0.6389

Q7

Q#5 - Please rate the order of importance of the following in your initial choice of PERSONAL CELL PHONE, on a scale of 1-7

Parameter Estimate

P-Value Tolerance

Price/Promotional discount 0.09651 0.0185 0.91478

Ability to Play Music -0.11165 0.0052 0.67424

Importance of Touch Screen -0.22011 <.0001 0.60131

Q5

Q#3 - Please rate the order of importance of the following in your choice of WIRELESS CARRIER,on a scale of 1-7:

Parameter Estimate

P-Value Tolerance

Brand Availabilty -0.14299 0.0003 0.76136

Data Availabillity 0.20886 <.0001 0.76505

Phone Pricing 0.07273 0.0849 0.99019

Q3Q#8 - On a scale of 1-7, please indicate how frequently you intend to use the following features on your NEXT CELL PHONE. These features may or may not be available on your current phone.

Parameter Estimate

P-Value Tolerance

Frequency of use of Calendar/Reminders 0.109 0.0041 0.60378

Frequency of use of Purchased ($$) Add-on Games or Apps -0.1323 0.0024 0.6863

Frequency of use of Music Playback -0.1534 <.0001 0.66558

Q8

Q#10 Generally, where do you look for information when purchasing technology products? (You may choose more than one answer but must choose at least one.)

Parameter Estimate

P-Value Tolerance

Internet – Retailer website (Binary Variable) 0.24198 0.0838 0.98292

Magazines – Hi-Tech (Binary Variable) -0.65675 0.0116 0.98897

Q10

Q#19 How would you best characterize the area in which you live?

Parameter Estimate

P-Value Tolerance

Suburban Area (Binary Dummy Variable) -0.2624 0.0851 0.99849

Q19

Q#20 Which kind of computer do you use most frequently?

Parameter Estimate

P-Value Tolerance

Other PC - Windows or Linux (Binary Dummy Variable) 0.58534 0.0039 0.99849

Q20

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CLUSTER ANALYSIS

Cluster Frequency

Standard Deviation (How close people are related to each other

inside cluster)

Maximum Distance from

Seed to Observation

Nearest Cluster

Distance Between Cluster

Centroids

1 49 1.3338 14.8592 3 7.1202

2 69 1.2066 14.1314 6 7.4241

3 42 1.188 14.7218 1 7.1202

4 62 1.2817 12.8745 1 7.5641

5 61 1.3117 14.6057 2 8.5896

6 29 1.3239 15.3594 2 7.4241

7 34 1.2864 13.6458 3 7.4825

Cluster Summary

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CLUSTER MEAN

1 4.844 4.895 4.03Average of the Others 3.72

CLUSTER MEAN

1 2.844 3.185 2.49Average of the Others 1.79

CLUSTER ANALYSIS: NARROWING FOCUS

#Q11. How likely are you to choose a "smart"

phone the next time you buy a personal cell

phone? (Continuous Scale 1-5)

#Q12. How likely are you to make your

next phone a BlackBerry, specifically?

(Continuous Scale 1-5)

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CLUSTER MEANS: PREFERENCES

#Q3. Please rate the order of importance of the following in your choice of WIRELESS CARRIER? (Continuous Scale 1-7)

1 4 5Brand Availability* H M MVoice Quality H H HVoice Availability H H HData Speed H H MData Availability* H H MService Plan Price H H HPhone Price* H M H

ClusterPreference

(1-3=Low, 3-5=Mod, 5-7=High, * Correlation w/ Linear Regression)

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#Q5. Please rate the order of importance of the following in your initial choice of PERSONAL CELL PHONE? (Continuous Scale 1-7)

1-3=Low, 3-5=Mod, 5-7=High

* Correlation w/ Linear Regression

1 4 5

Brand Reputation H M MVoice Clarity H H HEmail* H H MStyle/attractiveness H M MPrice/Promotion* H M HTech. Integration H M MEase of use H H HPhone Size H M HBattery Life H M HInternet H H MMusic* M L LVideo M L LPictures H M MGPS M M MQWERTY keyboard H H MTouch Screen* M M M

PreferenceCluster

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#Q7. Please choose how often you currently use the following features of your CURRENT CELL PHONE? (Continuous Scale 1-7)

(1-3=Low, 3-5=Mod, 5-7=High * Correlation w/ Linear Regression)

1 4 5

Call M H HText H H HEmail* H H LCalendar* H M LWeb Brow sing H H LSocial Netw orking M M LPurchased Apps L L LFree Apps* M L LCamera H M MVideo L L LMusic* L L L

ClusterPreference

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#Q8. How frequently you intend to use the following features on your NEXT CELL PHONE? (Continuous Scale 1-7)


1 4 5

Call H H HText H H HEmail* H H HCalendar* H H MWeb Brow sing H H MSocial Netw orking H M MPurchased Apps* L L LFree Apps H L MCamera H M MVideo M L LMusic* M L L

PreferenceCluster

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#Q10. Generally, where do you look for information when purchasing technology products? (Binary Variable)


1 4 5

In-Store Promo Displays M L MIn-Store Sales Rep M M MInternet-manufacturer's w ebsite M M MInternet-retailer's w ebsite* M M MInternet-review websites* H H HInternet-social media websites L L LInternet-technology w ebsites M M MMagazines-High Tech* L L LMagazines-Lifestyle L L LNewspapers L L LTelevision L L LWord of Mouth H H H

PreferenceCluster

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DISCRIMINANT ANALYSIS

1 4 5

Male? 0.45 0.67 0.45

Age: 1(18) - 8(55+) 3.2 4.2 3.9

Education: 1(HS) - 6(PhD) 4.4 4.4 4.4

Married? 0.55 0.75 0.78

Children? 0.25 0.51 0.55

# HH Members 2 3 3

Surburban? 0.57 0.67 0.69

Urban? 0.27 0.24 0.22

Mac? 0.05 0.07 0.05

PC? 0.93 0.84 0.84

Emotional Spender? (1-7) 4.0 3.6 3.8

HH Income: 1(<$50K) - 7(>$200K) 3.1 4.5 3.5

Mostly Spend? (0-7) 3.8 3.8 4.0

ClusterDemo/PsychographicsCLUSTER #1

▪ More likely younger▪ Less likely married, children,

suburban▪ More likely a PC owner

CLUSTER #4▪ More likely male▪ Higher income

CLUSTER #5▪ Very similar to Cluster #4

except balanced sex and lowerincome level

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DISCRIMINANT ANALYSIS

CLUSTER #1▪ Mostly IT Professionals▪ Somewhat Financial and Education

CLUSTER #4▪ Mostly Sales/Marketing and

Financial Professionals▪ Somewhat IT

CLUSTER #5▪ Most Diverse▪ Somewhat Science/Biotech and

Sales/Marketing

1 4 5

Artist/Musician/Designer 0.02 0.00 0.02

Science/Biotechnology 0.07 0.04 0.13

Government/Legal 0.09 0.05 0.04

Self-Employed/Consultant 0.00 0.05 0.02

Media/Journalism 0.02 0.00 0.00

Non-Profit/Social Services 0.00 0.00 0.07

Homemaker 0.00 0.00 0.05

Retired 0.00 0.00 0.02

Unemployed 0.00 0.00 0.04

Full-time student? 0.07 0.02 0.02

Engineering 0.05 0.07 0.05

Construction/Physical labor 0.00 0.04 0.00

Information Technology 0.23 0.15 0.09

Medical/Health Services 0.07 0.04 0.05

Sales/Marketing 0.09 0.20 0.16

Financial Services 0.11 0.22 0.05

Education 0.11 0.05 0.04

Retail/Hospitality 0.00 0.02 0.04

Occupation: 0(N) - 1(Y)Cluster

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CLUSTER LABELING

Cluster #1: “Hi-Tech Prosumer” ▪ High value on most phone and network features ▪ High current and expected use of most phone features ▪ Unwilling to pay a high price to get features ▪ Lowest income level ▪ Youngest

Cluster #4: “Typical BlackBerry Prosumer” ▪ High preference for most network features ▪ Moderate preference for most features (voice clarity, email, ease of use, battery life, QWERTY) ▪ High use of call, text, email, and web browsing ▪ Doesn’t use or plan to use apps, music, or video

Cluster #5: “Basic Prosumer” ▪ High value on voice quality/availability, price, ease of use, phone size, and battery life ▪ High use of call and text ▪ Low use of all other features ▪ Plan to increase use of email, calendar, web browsing, apps, and camera with next phone ▪ Cluster likely to converge with cluster #4 over time

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TARGET MARKET SELECTION

Age 30's

Sex 50/50, M/F

Income 75K - 125K

Education Bachelor's or Master's Degree

Job IT, Sales, Finance

Married Yes

Household 2 to 3 people

Residence Suburbs

Computer PC

Current Phone BB or non-smartphone

Current Provider Verizon

Type of Shopper Balances wants and needs, moderate spender

KEY DEMOGRAPHICS

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TARGET MARKET SELECTION

PREFERENCE or USAGEIMPORTANCE or

INTENTION

Wireless Carrier - Voice Quality HIGH

Wireless Carrier - Voice Availability HIGH

Wireless Carrier - Service Plan Price HIGH

Personal Cell Phone Preferences - Voice Clarity HIGH

Personal Cell Phone Preferences - Ease of Use HIGH

Intend to Use - Voice Calling HIGH

Intend to Use - Text Messaging HIGH

Intend to Use - Email HIGH

Marketing Channel - Web Review Sites HIGH

Marketing Channel - Word of Mouth HIGH

KEY PREFERENCES

PREFERENCE or USAGEIMPORTANCE or

INTENTION

Current Cell Phone Use - Purchased Apps LOW

Current Cell Phone Use - Video Playback LOW

Current Cell Phone Use - Music Playback LOW

Intend to Use - Purchased Apps LOW

Marketing Channel - Social Media Sites LOW

Marketing Channel - High-Tech Magazines LOW

Marketing Channel - Lifestyle Magazines LOW

Marketing Channel - Newspapers LOW

Marketing Channel - Television LOW

KEY PREFERENCES

OTHER FINDINGSSomewhat Important: In-Store Sales Rep, Manufacturer's website, Retailer's website, IT websites

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PROBLEM: MARKETING KNOWLEDGE

PROMOTION ▪ Overwhelming majority use Review Websites which is shown to have

a significant negative effect in our linear regression analysis. We need to find a way to improve BB image on review websites.

▪ Word of Mouth also very significant with target market.

▪ Ineffective: Paper advertising (i.e. newspapers or magazines), social media, website advertising, and TV ads

PLACEMENT ▪ User Distribution = AT&T 34%, Verizon 49% ▪ BB in 550 Wireless Carriers worldwide and 175 Countries, AT&T 34%, Verizon 49%

PRICE ▪ Logical, moderate spender - Value Pricing Model ▪ Must lower price to stay competitive: iPhone is $199 for 16GB, Storm2 is $199GB for 8GB ▪ Service Plan Pricing is also critical to target. Must work with wireless providers to offer various competitive packages

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PROBLEM: R&D EFFORTS

PRODUCT

Primary Intended Usage: Call, Text, Email, Web (Basic Stuff!)

R&D Focus ▪ Improve OS (i.e. ease of use and speed) ▪ Improve Email Features ▪ Improve Voice Clarity ▪ Extending battery life ▪ Development of FREE apps ▪ Minor Focus: GPS, Touch Screen

Not Important ▪ Development of Purchased apps ▪ Music Playback ▪ Video Playback

blackberry consumer preferences and segmentation

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