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Pitch Exclusive: The Blackberry dilemma

16-May-2011
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Pitch Exclusive: The Blackberry dilemma

Research in Motion (RIM), the maker of Blackberry, has been focusing on stepping out of the boardrooms and making a space for itself in the mid-segment. Currently, Blackberry is doing pretty well in the Indian market. It has successfully managed to step out of the corporate boardroom and has become a mainstream choice. But in this pursuit, the brand has lost its exclusivity. The dilemma for Blackberry is how it should reach out to a larger consumer segment and yet maintain its snob value and exclusive image.

The reason behind Blackberry’s huge success is the fact that it was one of the early movers in the smart phone space and had a differentiated offering.

In the effort to expand its reach, a couple of months back RIM slashed the price of Blackberry Curve 8520. In fact, it was for the first time that a Blackberry handset was available at a price below Rs 10,000. The brand at the same time has made an effort to shift its positioning too. The popular Vodafone ‘Blackberry Boys’ campaign was an effort in that direction. In a more recent Airtel BBM (Blackberry Messenger) TVC, some boys in a dormitory use BBM to communicate at night, much to the confusion of their warden. The strategy from Blackberry is simple. They are making an effort to come out of the black suit image they were confined to, to increase volumes. Blackberry has more than 10 lakh users currently in India.

Blackberry’s approach in India is to focus on the young users, which is the most lucrative segment and the largest too. Sample this: More than 60 crore people in India are currently below the age of 30. That’s half of India’s total population. Moreover, this is the segment that likes to be connected to the world all the time. And that’s why BBM has become an important selling point between the younger generations to be in touch with their friends across the world at no cost.

KJ Singh, CEO & Co-Founder, Evolve Brands (an independent marketing services company), agrees, “Today’s youth find BBM a very handy tool to keep in touch with their friends through Facebook and other social networking sites, games, music and chat rather than being bound to laptop/ desktop for the same purpose. One of the most attractive features of Blackberry is that BBM allows a free chat platform across the world.” Thus, targeting this segment will help in expanding the smart phone market in India, which is currently 15 per cent of the entire handset market.

Going mass Vs maintaining brand equity
But a larger question here is – won’t it dilute Blackberry’s brand equity? Naresh Gupta, National Planning Director, Cheil Worldwide SW Asia, said, “Blackberry has lost its premium image. This is a harsh reality for brands that want to go mass in India. But if numbers are a concern, it pays to lose the premium edge. If the company had stayed premium in imagery, it would have remained a niche player.”

So, how does one balance out the pursuit to get numbers and retain the premium imagery as well? Competitor brands like Samsung and Nokia have done this smartly in India. Both the brands offer phones from the very entry level to the most premium level by creating sub brands to cater to the needs of different segments. Take Nokia, for instance, it has its E series smart phones, which are mid and premium handsets, while the C series caters to the lower end of the smart phone market. Similarly, Samsung has its range of smart phones under three sub-brands Galaxy, Omnia and Wave. All the three ranges have different operating systems and cater to different consumer segments. This way, these brands are able to cater to a larger set of consumers without the threat of diluting the brand positioning. In contrast, RIM is relying only on Blackberry. Jagdeep Kapoor, Chairman & Managing Director, Samsika Marketing Consultants, has a different point of view. He asked, “Why do you need a sub-brand if you have a strong mother brand to encash on?”

With the snob value gone too, corporate world is looking beyond Blackberry and the brand may end up losing its crème customers. In a key market like the US, most of the buys for the brand are for low-end models, which is affecting the margins despite the booming smart phone market. Blackberry’s share in the US smart phone market fell to 15 per cent in the first quarter of 2011 from 37 per cent in the same period last year (The Nielsen).

The real test for this brand in India will start now. And the fate will depend a lot on how it handles new launches and how smartly it works out the positioning of the brand. Also, how the company differentiates its high end models from the low ones.

Tags Research In Motion BlackBerry Airtel Samsung Nokia Naresh Gupta Jagdeep Kapoor Pallavi Srivastava

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