Value Based Marketing Concept Marketing Essay

Value Based Marketing Concept Marketing Essay Research in Motion Limited, based in Waterloo, Ontario, Canada was founded in 1984. It is one of the largest companies in Mobile Communications worldwide. It took the world by storm by launching its leading product Blackberry smartphone in 1999. The current product includes Blackberry Play book Tablet, Blackberry smartphone, software for Businesses and other related accessories. It has got its identity in North America, Asia-pacific, South America and Europe. The Company is led by President and CEO, Thorsten Heins. Frank Boulben was named Chief Marketing Officer effective June2012. Executives and sales people from around the world boasts about the possession and utility of Blackberry. It enhances their ability to access key corporate information and connect with their colleagues in real time. The resulting efficiency has resulted in sales agreements being closed faster and key decisions being communicated to Top Honchos. The BlackBerry smart phone has become the one device that many business people find hard to function without.(Mcgraw-hill.com) The BlackBerry solution is now available on over 300 networks in over 120 countries. Recently, on 5 June 2012, its stock fell below $10 for the first time since 2003. Company is losing grounds to Apple Inc.s iPhone and phones that run Google Inc.s Android software like Samsungs. Revenue for the second quarter fiscal is $2.9 billion which is down 31% from $ 4.2 billion in the same quarter of fiscal 2012. Company net loss for the quarter was $ 235 million (www.press.rim.com/newsroom, 2012) After studying the case studies and using the Marketing mix strategy and Value based marketing models I have analyzed that customers want value for the price they pay for. RIM can create value through quick innovation, market research, market trends and realities. It also needs to change with changing needs of the people. Blackberry was once the pioneer in mobile industry, it has lost its shares in the current market due to slow adoption with changes in demand of consumers. I have also studied the strengths, weakness, threats and opportunities that blackberry have in the current situation. I have analyzed that Blackberry has a potential to rule the market again however the company should invest on new technology according to the needs and change in demand in the mobile industry 1.0 Value based Marketing concept Companies generally focus on maximizing the profits than on maximizing customer value. The late Peter Doyle, in his book value-based marketing, charges that profit maximization leads to short term planning and under-investment in marketing, promoting a focus on Sales, market share and current profits. (Doyle, 2000) This concept erodes the competitiveness in the long run as it eliminates the opportunities in the new markets. Companies ignore the fact that the real investment of a company relies on brand management, customer relationship, Partner relationship and knowledge about the market. Customers buy value rather than products and services. It is a Value package of cost of the product and the benefits that are significant to the end users. Customers hardly find true value, when they find they hardly ever leave until a better value takes over. (J Nicholas De Bonis, 2012) Companies should discover customers attributes and benefits the customers look for in a product and create a marketing strategy to deliver value to them. The steps involve market research and how customers perceive different brands available in the market. The diagram below depicts how cost based pricing is different from Value based pricing. In value based approach value comes first and in cost based approach companies target on profit maximization. (Pricing and price stratergy, n.d)http://t3.gstatic.com/images?q=tbn:ANd9GcSMggVwiSafznfxuwsbt3bnGX_6m75FlJJ993t1Gi9ezRLXeRaH7g How companies create values: Customer Relationship Management: Companies maintain the database base of the customers, collect information on the preferences and likings of the customers, Use information to target the potential/target customers through products services and promotions that adds value to the most important aspect of customer requirements. Target Segments: Value driven companies focus one or more consumer segments, ensure additional value on the product and reduce cost through extremely efficient operations. Retaining the existing loyal customers by adding value features that can be helpful to the target customers. http://image.slidesharecdn.com/valuebasedmarketing-120228185920-phpapp02/95/slide-8-728.jpg?1330477417 Companies can focus on key areas: Focusing on the customer Focusing on market trends realities Articulate new market opportunities Emphasizing on customer satisfaction Creating single cohesive strategy CMO of Research Motion also talks about which customers they intend to serve and why they are going to serve them better than the competitors. By adding value to the product, RIM could have the greatest come back http://www.youtube.com/watch?v=SAJp_tL7ggE (Boulmen, 2012) 1.2 Marketing Mix Strategy http://business-fundas.com/wp-content/uploads/2011/02/Strategies-for-Marketing.jpg (The 4 Ps of marketing, n.d) The term marketing mix was coined by Neil Borden. Every Marketer should have knowledge of this theory. It is part of the segmentation process where all 4 Ps, Product, Price, Place, Promotion play their role. This model helps in positioning based on the elements that are best suited for marketing. The above diagram also talks about the relevant questions that the company can think of and based on the best answers the strategies can be made. By answering the above questions, RIM can create a value for its products to effectively compete in the market. 2.0 Driving forces of change in the mobile Industry and changed landscape The best innovation ever is of a mobile phone. Mobile has created worlds most innovative companies. The macro trends surrounding the industry are: Persistent Demand: There seems to be a never ending demand of mobile phone. There has been demand of mobile phones, smartphones tablets throughout the world. People strive hard to earn a good phone. The market has been swayed with the extensive demand of mobile phones. Customer Centric Mobile Applications: Every company is struggling hard on innovation to compete on products and features that the customers expects or over expects from mobile phone. Market Disruption: There is a deadly competition happening in the mobile market. There are mergers, acquisitions, war among technologies, Facebook planning to create its own phone, Google planning to buy Motorola. Lack of innovation problem for Nokia Blackberry has created havoc in the Mobile Industry. Based on the trends that we analyzed, we can say that Mobile industry will remain the most lucrative industry in the years ahead and will lead to further innovations in technology and designs. 3.0 Understanding Customer Behaviour and upcoming Challenges Customers look at maximizing values. High customer value delivery is the key to customer loyalty. 3.1 Drivers of Customer Equity Value Equity: It is a combination of effective of quality, price and convenience. It is effective where companies have differentiated products. Brand Equity: Its a bundle of perception, attitude and awareness. Effective when products are less differentiated. Relationship Equity: It is for companies relying on customer loyalty programs and special and maintaining relationships. 3.2 Factors affecting Customers behavior Personal Factors: Includes Age, Gender, values, personality, lifestyle, occupation, etc. Blackberry is targeted for a separate class of people that needs quick texting, believes in getting things done, messenger, and Internet access with media player. It is a great way to connect people, place and resources access through Mobile. Cultural Factors: It involves the cultural differences of individuals based on the culture and background an Individual comes from. Geographical location, Nationality, Religion is a part that affects the customers choice and beliefs. Social Class: It is segmented based on the income earned by an individual group of people. It affects the customers behavior in a way where not every person can buy a specific product because of limited source of income. 4.0 SWOT Analysis Strengths Brand: Brand is internationally recognized and established. Products beneficial for consumer and business professionals as well. The most relied upon phone for business e-mails Potential to develop a range of products based on specific designs and innovations over the years Patented rights for the thumbwheel and QWERTY keyboard found on the device. Its products have awarded for unique features and products. It still has a huge database of loyal customers who do not want to part from their phones. Weaknesses Prolonged lack of innovation Persistent fixation with a platform which is losing appeal for both customers and developers Blackberry phones are expensive and chic product that is gets costly for organizations that want to offer email across large organizations. Limited storage capacity compared to other phones. Opportunities: Non Exposure of its product line RD talent is getting increasingly low. Acquisitions: Smaller firms with low resources to invest on technology can be a good buy-out option. Market Intelligence reveals an immense opportunity for smart phones similar technology that can be exported. Exports are expected to can reach billions by 2013 end. The new BlackBerry Tablet OS (found on the Play Book) looks like a robust platform in the long run, and it is built on QNX OS that is tried-and-tested. Threats: Aggressive competition on evolving new soft wares in the global smartphone market In 2007 Symbians operating system designed for mobile devices held an estimated 65% worldwide share of the converged devices, exporting 77.3 smartphones in 2007, while RIM Blackberry OS at 11%.(2011) In Exports RIM leads in North America standing at 42% Key competitors have already expanded globally like Apple, Samsung, LG, and HTC Product imitations, loss of source code, software piracy and are more common in developing and third world countries Competitive market for employees in the global software development industry. Rapid innovations from other companies. Changing consumer behavior: With wider options in features and technology customers choice change rapidly. It is a threat as it becomes difficult to cope with the rapid change in consumer requirements. 4.1 TARGET MARKET The primary target market for Blackberrys is the business people between 25 to 60 years. These people are the ones that want their things done, more on the go people and mostly occupied with their work. A device which can provide them more suppleness of wireless network i.e. internet services, emails and GPS services is needed to make lives easier of the corporates. Blackberry should also add features that can target children and Generation Y as they are more technology savvy and innovation hungry. The Gen Y group is always exquisite about latest and smarter technology and they respond rapidly to changes in technology. They are also willing to pay high prices for the benefits and value offered to them. Hence it is a prospective market for RIM. 5.0 Marketing Mix strategy for RIM to achieve the lost market share PRODUCT DEVELOPMENT BRANDING: In this dynamic environment of technology RIM needs to invest on innovation and R D. Horizontal business opportunities like Multimedia and Satellite services will generate extra revenue. RIM needs to position itself as the leading smart phone provider for professionals in emerging countries such as Brazil, Russia, India and China. MARKET SEGMENTATION: They should target others segments not specifically but by adding additional features that can attract students, youths and try to indulge in other product or cross sell other products. CHANNEL SALES: RIM can negotiate with major phone services provider in several countries, this will help RIM to promote their phones through a mutual relationship. Internet marketing and social media channels can also be widely used for advertisements marketing COST CUTTING: RIM can also look at reducing the cost through operational excellence. This can further reduce the cost of the supply chain and can also reduce the per unit cost of making the phone and ultimately selling it at a competitive price. 6.0 RECOMMENDATION 1) RIM needs to innovate and invest on technology this needs to come with new products with more user friendly feature to satisfy current consumer demand and attract new customers 2) RIM should also strongly focus on the advertising campaign to increase brand awareness through viral advertising, television advertisements, internet marketing etc. 3) RIM sells its equipment and services in around140 countries, so it should target to place the product in some other developing countries. 4) RIM should target not only business clients but also target tech savvy Generation Y by increasing product line. 7.0 CONCLUSION Looking at the disappointing sales figure of this year RIM should develop robust product strategies to win over competitors. In order to regain the competitive edge RIM needs to utilize its resources to utmost level by increasing the product line. Also RIM can make strategies to foresee future competitors e.g. Facebook planning to launch its own mobile phones. Facebook Inc. and plan long term strategy as per market demand. It is time for RIM to step ahead of the game and compete directly with Apple and Samsung. As per market research Blackberry is in the maturity phase of its life cycle so it needs to make the future plans accordingly. It is high time that Blackberry enters the market with a big bang giving tough competition to its competitors.