BlackBerry's Product Lifecycle Failure and Marketing Strategy

Introduction to Product Lifecycle Theory

RIM, currently known as BlackBerry Limited, was at one time the most valuable company in Canada and the largest smartphone manufacturer worldwide (Friend, 2013). Today, however, the company struggles to remain viable, with revenues, subscribers, and profitability declining consistently since 2013. The fall of RIM can largely be attributed to poor product lifecycle management. This paper describes this problem in more detail and provides recommendations for addressing it.

Product lifecycle theory demonstrates that a product generally passes through four stages: introduction, growth, maturity, and decline (Gorchels, 2006). The first stage, introduction, involves launching the product to the market. At this stage, there is little or no competition, giving the company an important competitive advantage in the marketplace. Nonetheless, costs tend to be high as the company must develop the market for the product, and high costs often mean little or no profitability.

At the second stage, growth is experienced. Sales increase rapidly, costs fall due to economies of scale, profitability increases, awareness of the product grows, and market share expands substantially. Nonetheless, competition increases, potentially resulting in reduced prices. The third stage, maturity, is characterized by further cost reduction, market saturation (the sales peak is reached), increased competition, reduced prices, and diminished profitability potential. Once saturation is reached, growth begins to decline. In the decline stage, sales volume reduces and profitability diminishes further.

Every stage of the product lifecycle has important implications for marketing (Cant et al., 2006). In other words, the marketing mix must be adjusted accordingly at each stage. In the introduction stage, the focus of marketing is to develop product awareness and build the market for the product. This may be achieved through product branding, establishing product quality, obtaining intellectual property rights, penetrative pricing, selective distribution, and targeting promotional activities at early adopters.

In the growth stage, the focus of marketing shifts to growing market share and building brand preference. The firm adds more innovative features to the product, opens additional distribution channels, maintains prices, and targets promotional activities at a larger audience. In the maturity stage, the aim of marketing is to protect market share. This may be achieved by differentiating the product from the competition, lowering prices, intensifying distribution, providing purchase incentives, and emphasizing product differentiation in promotional messages. In the final decline stage, the firm has three options: retain the product by adding new features, minimize costs and focus on a niche market, or discontinue the product (Gorchels, 2006).

RIM's Business Problem

Founded in 1984, RIM experienced tremendous growth during the first two and a half decades of its existence. During that period, the company made remarkable innovations in wireless and mobile communications, introducing the first two-way communication pager in 1996 and the first smartphone in 2000 (Friend, 2013). For the telecommunications industry, RIM was a game changer, significantly revolutionizing the way human beings communicate. At its peak in September 2012, RIM had approximately 80 million subscribers globally, with revenues in excess of $19 billion. The BlackBerry was at that time the most preferred smartphone worldwide — a major achievement in terms of building brand preference.

From late 2012, however, RIM's position began to erode, in large part due to the increased competitive strength of Apple Inc. and other smartphone manufacturers (Arthur, 2014). In the years that followed, the company consistently recorded stark declines in revenues, profitability, and subscriber numbers. Even with extensive strategic and leadership changes, restructuring, and a change of name from RIM to BlackBerry Limited, the company has yet to regain its previous stature.

One of the major reasons for RIM's decline is its failure to innovate and respond to the changing needs of consumers. Noticing RIM's shortcomings, Apple and Android vendors introduced superior smartphones — devices with larger touchscreen displays, faster processing speeds, more appealing designs, more applications, and a better overall user experience (Savov, 2016). While RIM's devices had an unparalleled reputation for security and functionality, the company ignored opportunities to improve its products, giving rivals a perfect chance to displace it in the market.

At its maturity stage, the company had an opportunity to rethink its product strategy, particularly in the wake of increased competition. Nevertheless, choosing to retain its focus on the corporate consumer, the company did little or nothing to differentiate its products or respond to the evolving needs of the individual consumer (Silcoff, McNish & Ladurantaye, 2013). As a result, it became increasingly difficult for the company to reverse its decline, eventually leading to the discontinuation of most of its hardware products. Had the company handled its product lifecycle differently, it might still be the dominant player in the global smartphone market.

Current Marketing Strategy

In recent years, RIM has been shifting its focus to the enterprise market. The company now concentrates on designing, developing, and marketing hardware and software products for industrial use. Most of its products are now targeted at government agencies and business organizations — that is, the company's present products are not designed with the everyday consumer in mind. This, in large part, explains why compelling BlackBerry commercials are now quite rare. Even so, a small niche of individual consumers remains loyal to the BlackBerry brand.

Conclusion

RIM's trajectory from global smartphone leader to a struggling enterprise-focused vendor illustrates the critical importance of proactively managing the product lifecycle. The company's failure to innovate and adapt during its maturity stage allowed competitors to erode its market position irreversibly. By applying product lifecycle theory and revamping its marketing mix — with an emphasis on consumer-oriented product design, competitive pricing, broad-based promotion, and expanded distribution — RIM still has an opportunity to reclaim relevance in the global smartphone market. The key lesson is that no market position, however dominant, is permanent without continuous innovation and strategic responsiveness to consumer needs.

References

Arthur, C. (2014, September 29). Ten things to know about BlackBerry — and how much trouble it is (or isn't) in. The Guardian. Retrieved from https://www.theguardian.com/technology/2014/sep/29/ten-things-to-know-blackberry-john-chen

Cant, M., Strydom, J., Jooste, C., & Plessis, P. (2006). Marketing management (5th ed.). Cape Town: Juta & Co. Ltd.

Friend, D. (2013). RIM's rise and fall: A short history of Research in Motion. Retrieved from http://globalnews.ca/news/384832/rims-rise-and-fall-a-short-history-of-research-in-motion/

Gorchels, L. (2006). The product manager's handbook (3rd ed.). New York: McGraw-Hill.

Savov, V. (2016). BlackBerry's success led to its failure. Retrieved from http://www.theverge.com/2016/9/30/13119924/blackberry-failure-success

Silcoff, S., McNish, J., & Ladurantaye, S. (2013, September 27). Inside the fall of BlackBerry: How the smartphone inventor failed to adapt. The Globe and Mail. Retrieved from http://www.theglobeandmail.com/report-on-business/the-inside-story-of-why-blackberry-is-failing/article14563602/?page=all