RIM's BlackBerry: Reaching Beyond Existing Demand
By Brendan Murphy
How do you maximize the size of the blue ocean you are creating?
Research In Motion (RIM) is a Canadian business most popularly known for its launch of the BlackBerry smart phone in 2001. The company has grown to achieve FY2007 sales of US $3.04 billion and net income of $631.6 million.
Success creating a Blue Ocean…
The Blue Ocean that RIM created through its BlackBerry keeps growing every year despite the intense wireless handheld market competition. RIM continues to penetrate existing markets and grow internationally. The company’s sales grew 47% in FY2007 compared to 2006 and its earnings grew 65%. Subscribers quadrupled from 2 million in 2004 to 8 million by April 2007.
Blue Ocean strategic move…
RIM’s blackberry launch not only created technology innovation, but it created superior buyer value innovation as well. This is an example of the third principle of Blue Ocean Strategy: Reaching beyond existing demand. This is a key component of achieving value innovation. RIM broke away from traditional cell phone and pager competition because the BlackBerry offered a new type of wireless handheld solution for companies.
By aggregating the greatest demand for the BlackBerry, RIM’s approach attenuated the scale risk associated with creating a new market. As a result, companies adopted BlackBerries because it saved time and money because staff members could now get and send email almost any place at any time without having to go back to the office.
How do you reach beyond existing demand?
According to the authors of Blue Ocean Strategy, professors Chan W. Kim and Renee Mauborgne, companies should challenge two conventional strategy practices. “One of this is focusing on existing customers. The other is the drive for finer segmentation to accommodate buyer differences.”
Typically, to grow their share of a market, companies strive to retain and expand existing customers. This often leads to customer preferences. The more intense the competition is, the greater, on average, is the resulting customization of offerings. There are now over 100,000 installations of BlackBerry Enterprise Servers worldwide. Rim is aggressively partnering with wireless carriers to expand availability. The BlackBerry’s success in the corporate market has quickly spread over to the consumer market where RIM plans significant future growth.
In Blue Ocean Strategy, “To maximize the size of their blue oceans, companies needs to take a reverse course.” Companies, as many of BlackBerry’s competitors are, compete to embrace customer preferences through finer segmentation. Often times this may result in creating too-small of target markets.
“Instead of concentrating on customers, they need to look to non customers. And instead of focusing on customer differences, they need to build on powerful commonalities in what buyers value.”
RIM currently has service agreements with over 270 wireless networks in about 110 countries. As a result RIM has been able to reach beyond existing demand to unlock a new mass of customers that did not exist before.
Steadily increasing buyer value…
BlackBerry offers high reliability, long battery life, multiple mailboxes at once, and web browsing capability. More so, BlackBerry created a highly secure offering for companies because all emails and their contents could be protected behind their corporate firewalls.
So, when your company is trying to reach beyond existing demand and maximize the size of your blue ocean – Blue Ocean Strategy asks these questions:
“Where is your locus of attention – on capturing a greater share of existing customers, or on converting non customers of the industry into new demand? Do you seek out key commonalities in what buyers value, or do you strive to embrace customer differences through finer customization and segmentation? To reach beyond existing demand, thinking non customers before customers; commonalities before differences; and desegmentation before pursuing finer segmentation.”
Brendan Murphy is the Marketing Manager for Strategize Blue (www.strategizeblue.com), a Blue Ocean Strategy Training and Consulting company based in San Diego. He works under Dr. Zunaira Munir, the internationally exclaimed expert and keynote speaker on Blue Ocean Strategy.
