Reclaiming the SmartPhone Market

M. Brent EasonBen FurrCarrie MartinelliAdam Scott

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— ROUND 1 —BACKGROUND INFORMATION

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ORGANIZATION OVERVIEWS

▪ Founded 1976 as Apple Computer

▪ 2009 Revenue: $42.91 billion

▪ 2009 Net Income: $8.24 billion

▪ Employees: 34,300

▪ Founded 1984

▪ 2009 Revenue: $11.1 billion

▪ 2009 Net Income: $1.89 billion

▪ Employees: 12,000

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PRODUCTS

▪ BlackBerry product first launched in 1999

▪ Wide range of Wireless Service Providers (AT&T, Verizon, Sprintand all major global providers)

▪ 41 Million units sold in 2009

▪ 80+ Million units currently in use globally

▪ Introduced in 2007 with AT&T as the exclusive provider

▪ 3G version launched in 2008 with high-speed data

▪ 3GS version launched in 2009 with faster data throughput rates,higher resolution camera and updated OS

▪ 43 Million units sold as of Jan. 2010

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CUSTOMER PROFILES

iPhone CustomersData From CrunchGear.com

— July 13, 2008

▪ 72% Male▪ Average Age 31 ▪ 31% 15-24 ▪ 32% 25-34 ▪ 31% 35-49 ▪ 6% 50+▪ 58% College Education (43% Nat’l Avg)▪ 43% Reside in NY or CA (Twice the Nat’l Avg)▪ Average HHI $75,600 (26% over Nat’l Avg)

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CUSTOMER PROFILES

BlackBerry Prosumers

▪ 64% Male▪ Average Age 24▪ 46% College Education▪ Average HHI $59,200

▪ Unique smartphone that may be used as both a businesstool and a non-business (prosumer) device

▪ Allows IT professionals the ability to deploy and maintainend users efficiently with the BB Enterprise Server

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EXTERNAL ANALYSIS

KEY INSIGHTS

▪ Competition from iPhone has forced BlackBerry devices to support morefeatures– LBS, downloadable applications, higher resolution camerasand touchscreen technology.

▪ BlackBerry sales for business use are increasing, however, prosumersales are not having the same success.

▪ Enterprise (Business) activations increased 14% in 2009

▪ Prosumer activations increased 12% in 2009

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INTERNAL ANALYSIS

KEY INSIGHTS

The cost of new feature implementation has increasedover the past 3 years to keep pace with the iPhone:

▪ Estimated R&D cost to implement BlackBerry Maps is $14 per device in 2009 compared to $11 per device in 2008

▪ Estimate R&D cost to implement BlackBerry Pushcast feature is $16 per device for 2010

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— ROUND 2 —THE RESEARCH PROBLEM

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MARKETING PROBLEM

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 offeringsand speed to market

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OUR RESPONSE

Carefully analyze customer preferences andcharacteristics in order to better define customer

segments, determine which customers tofocus marketing efforts on, and what features

are most important to those customers.

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BUSINESS IMPLICATIONS

TARGETING & POSITIONING

PRODUCT DEVELOPMENT

PRICING & PROMOTION

BOTTOM LINE: Sales, Profit, and Market Share

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DEVELOPING OUR RESEARCH

CONSIDERATIONS▪ Is the question too broad or too narrow?

▪ Is there sufficient data to be collected? Multiple perspectives?

DV = PURCHASE INTENT

INDEPENDENT VARIABLE SET CRITERIA▪ Unbiased (not sample specific)

▪ Useful and mostly significant (legitimate, predictive ability) ▪ Largely guided by background knowledge

▪ Manageable for both respondents and ourselves

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— ROUND 3 —DATA DESCRIPTION

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

▪ Follow-up Survey

SECONDARY▪ RIM/BlackBerry Marketing Presentation:

“iPhone vs. BlackBerry” — January 2009

▪ Mintel Reports (NCSU Library source)

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DATA SOURCES

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HOW SMART IS YOUR PHONE?

SURVEY STRUCTURE Eligibility Check

Information About Existing Phone

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

▪ This structure creates bias with the wording. A numerical scale from 1-5

or 1-7 would be ideal.

General Phone Preferences

Demographic Information

Not atall likely

SomewhatUnlikely Undecided Somewhat

LikelyVery

Likely

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HOW SMART IS YOUR PHONE?

INDEPENDENT VARIABLES

▪ Phone-Related:

“How important is voice quality/clarity in a cell phone?”

“Do you prefer a physical keyboard or a touch screen?”

▪ Demographic:

“What best describes your education level?”

“What is your marital status?”

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QUESTION BREAKDOWN

ELIGIBILITY CHECK & EXISTING PHONE INFO

#1: Do you own or have exclusive use of at least one phone?

▪ If NO, exits survey

#2: Did you choose your phone, or was it issued to you for your job?

#3: Which company provides your cellular service?

#4: What kind of device do you currently use?

▪ Separates smartphone users from others.

#5: Did you purchase your current phone because of a promotional

discount?

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QUESTION BREAKDOWN

PHONE AND TECHNOLOGY PREFERENCES

#6: Which type of phone offers the best value for the money?

#7: If price or availability were no object, which would you most prefer to use/own?

▪ The above two questions have three possible answers:

▪ BlackBerry

▪ iPhone

▪ Neither/Other

#8: How likely are you to make your next phone a BlackBerry?

▪ This is our primary dependent variable.

▪

▪

▪

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QUESTION BREAKDOWN

PHONE/TECHNOLOGY PREFERENCES CONT.

#9: If you do not currently use a Smartphone, what one thing wouldmost make you purchase one?

Required for Work, Cheaper, User Friendliness, Smaller/Stylish, NOTA

#10-13: Importance of…

Voice Network

Data Network

Not at All � Somewhat � Highly � Most

#14: Do you prefer a physical keyboard or a touch screen?

• Style/Color

• Features/Applications/Games

•

•

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QUESTION BREAKDOWN

FINAL TECH QUESTIONS & DEMOGRAPHICS

#15: Which kind of computer do you use most frequently?

MAC, PC, Both/No Preference

#16-20: Demographics:

Gender

Age Range

Educational Level

A

Marital Status

Children

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HOW SMART IS YOUR PHONE?

POSITIVES Acceptable number of responses

Questions provide enough data to run initial analysis

LESSONS LEARNED Scaling of questions not broad enough

Not enough demographic questions

Respondents are in our acquaintance circle

▪ Does this create a problematic bias?

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SURVEY VERSION #2

▪ Respondents: Existing Only or Brand New Set?

▪ Garner specific wording and scaling from more experienced marketing professionals

▪ Focus on demographic data for segmentation and clustering

▪ Complete by mid-April

▪ Pull ideas from secondary data to allow for best possible comparativequalities

SECONDARY DATA

PORTIO RESEARCH

Tactical Positioning: iPhone vs. BlackBerry

▪ Background information for our marketing analysis

▪ SWOT analysis of iPhone and BlackBerry

▪ Opinions from Industry Experts

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SECONDARY DATA

MINTEL REPORTS▪ Based on Primary and Secondary Data

▪ Customer Base Information

▪ Preference Studies

▪ Market Forecasts

▪ Customer Segmentation

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SECONDARY DATA

HOW WILL WE USE IT?▪ To improve original survey

▪ Validate results from primary data

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— ROUND 4 —ANALYSIS PLANS

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ANALYSIS PLANS

CLUSTER ANALYSIS▪ Identify meaningful customer segments

DISCRIMINANT ANALYSIS▪ Profile each segment demographically

REGRESSION ANALYSIS▪ Identify significant factors affecting smart phone choice

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ANALYSIS PLANS

CLUSTER VARIABLES▪ Phone/service features

▪ Price/promotion responses

DISCRIMINANT VARIABLES▪ Demographics

▪ Lifestyle characteristics

Results will be used to form targeting and positioning decisions.

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DEPENDENT VARIABLE▪ Likelihood of choosing BlackBerry

INDEPENDENT VARIABLES▪ Phone Features / Service Ratings

▪ Demographics

▪ Price/Promotion Response

▪ Lifestyle Characteristics

REGRESSION ANALYSIS

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▪ Run Stepwise Regression to eliminateinsignificant variables

▪ Check for Multicollinearity with aTolerance Value of .10

▪ Investigate Curvilinear Effects andInteraction Effects

REGRESSION ANALYSIS

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