the bb secret presentation

8/8/2019 The Bb Secret Presentation

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The bb secret

You don't have to choose between

making money and making sense



Sustainable business

Blackberry A key element for RIMs success inbuilding the Blackberry brand was being able torespond quickly to opportunities, said Kalbfleisch.

In fact, BlackBerry wasnt what RIM did originally.RIM set out to build pagers. BlackBerry was asoftware, and in spite of the companys bestefforts to brand the device under the name RIM

and the software as Blackberrycustomers didntagree.



it is classic example of how a customer brandsyou. Our most powerful brand tool is that aproduct does what it is supposed to do.

People got passionate about what it does.They wanted to associate their device, whatthey hold in their hand, with the brand name.

The key to the BlackBerry Brand is it doeswhat it promises. BlackBerry wasnt afraid tolet the customers own the brand.



What else does Blackberry teach us? 1. Emotional Selling Matters.

That became the essence of the brand. Blackberry became a status symbol. A confirmation for Type As that theirlifestyle works. A way to stay connected to work at all times.

The brand became a symbol of the user. Emotion selling was the key. That is important to remember in B2B.Emotional selling should not be overlooked. The message to sales managers was: What does it say about yourorganization if you dont have one? What image does it give you? The marketing strategy was based on a statusappeal.

2. Leverage the Channel.Blackberry was also careful to play the channel card well. They sold the devices through the larger carriers, AT&T,TMobile, Verizon, and let the carriers do the marketing. Carriers had the budgets, so Blackberry leveraged that.Blackberry put the brand almost entirely in the carriers hands for 5-6 years.

3. Unify the MessageBlackberry invested in the channel to provide sales training. They realized it was essential to teach retailers how tosell the product and carry out the brand message.

Shifting Brand Strategy

Blackberrys shifting brand strategy reflected the change that happens in many technology and device companieswho start off selling features, and then become aware of the brands heart and soul as the brand gains credibility.

In the beginning, Blackberry marketed its features.Then the message shifted to become about Business Success.That campaign merged into one about Life Success.

The value promise of BlackBerry became that its a tool to let you live your life.



Global Strategy Shifted Again

As the device went global, Blackberry again learned and adapted to itsmarket.

In the UK, the message that was similar to the US message about gainingstatus by having a Blackberry worked well.

However, is some European countries, the status image didnt resonate.The message became about taking control of time. Work and Life balance.

In Asia, and Latin American the message was about efficient use of time. By featuring TV celebrities in ads talking about what their Blackberries

meant to them, Blackberry sent the message that it was selling success. Sell the Brand

The shift in thinking from What does Blackberry do? to What doesBlackberry do for me was a powerful introspection on the Brand for theBlackberry team.

Blackberrys final piece of advice was: Dont sell Products, sell the Brand.



SI TODOS MIS AMIGOS TIENEN BLACKBERRY Y EL BBMESSENGER, ENTONCES MI COSTO DE OPORTUNIDAD DECOMPRAR UNA BLACKBERRY ES MENOR.

SI TODOS MIS AMIGOS TIENEN BLACKBERRY Y YO ME

QUIERO COMPRAR UN iPHONE, ENTONCES MI COSTO DEOPORTUNIDAD ES MAYOR

TAMBIEN TENEMOS QUE PONER LO DE LOS SWITCHINGCOSTS. QUE SI QUIERO CAMBIARME DE BLACKBERRY A

iPHONE, PERO TODOS MIS AMIGOS TIENEN BBMESSENGER, ENTONCES MIS SWITCHING COSTS VAN ASER MAS GRANDES



We also face a sunk cost because in some plans we have topay certain amount for the cell-phone, and then everymonth there is a payment depending on the plan and onthe total calls and messages sent. We don´t have to pay this

money every month, it is only when we get the cell-phone.We can not be able to get back this money.

We can introduce the option of loss of the cell-phone We have a choice of buying an insurance, we have to pay

$40 every month so if one day we loose or our cell-phoneor it is robbed, the cell-phone company will give us a brandnew cell-phone.



TAMBIEN TENEMOS QUE PONER LO DE LOS SWITCHING COSTS. QUE SI QUIERO CAMBIARME DEBLACKBERRY A iPHONE, PERO TODOS MIS AMIGOS TIENEN BB MESSENGER, ENTONCES MISSWITCHINGCOSTS VAN A SER MASGRANDES

Search costs are one facet of transaction costs or switching costs. Rational consumers will continueto search for a better product or service until the marginal cost of searching exceeds the marginalbenefit. Search theory is a branch of microeconomics that studies decisions of this type.

The costs of searching are divided into external and internal costs (Smith et al., 1999). External

costs include the monetary costs of acquiring the information, and the opportunity cost of the timetaken up in searching. External costs are not under the consumer's control. All they can do ischoose whether or not to incur them. Internal costs include the mental effort given over toundertaking the search, sorting the incoming information, and integrating it with what theconsumer already knows. Internal costs are determined by the consumer's ability to undertake thesearch, and this in turn depends on intelligence, prior knowledge, education and training. Theseinternal costs are the background to the study of bounded rationality.

The Internet was expected to eliminate search costs (Pereira, 2005). For example, electroniccommerce was predicted to cause disintermediation as search costs become low enough for end-

consumers to incur them directly instead of employing retailers to do this for them. This would inturn lead to lower prices and less variation between prices quoted by different sellers.



The definition of switching costs is quite broad. Thompson and Cats-Baril (2002)[citation needed ] defines switching costs as "the

costs associated with switching supplier ", while Farrell and Klemperer (2007) write that "a consumer faces a switching cost between sellers when an investment specific to his current seller must be duplicated for a new seller ". As these definitionsindicate, switching costs can arise for several different reasons.

Examples of switching costs include the effort needed to inform friends and relatives about a new telephone number afteran operator switch, costs related to learning how to use the interface of a new mobile phone from a different brand andcosts in terms of time lost due to the paperwork necessary when switching to a new electricity provider.

Types of switching costs include: exit fees, search costs, learning costs, cognitive effort, emotional costs, equipment costs,

installation and start-up costs, financial risk, psychological risk, and social risk. Some of these costs are easy to estimate. Exit fees include contractual obligations that must be paid to the current supplier

and compensatory damages that may be awarded for breach of contract. Often, vendors combine sign-up incentives withpenalties for early cancellation. Careful buyers who read the fine print should not be surprised by exit fees. Search costs andlearning costs, the effort and expense required to find an alternative supplier and learn how to use the new product, are alsousually expected.

On the other hand, the psychological, emotional, and social costs of switching are often overlooked or underestimated byboth buyers and sellers. Gourville (2003) lists several rules of thumb to help understand why many consumers do notimmediately switch from a product they currently use to the latest innovative improved product, even if the cost differenceis minimal. 1) People are sensitive to the relative advantages and disadvantages of any change from the status quo.

Therefore, a new, improved product, no matter how great it is on its own merit, must be significantly better than what theconsumer is currently using before he will switch. 2) Different people have different reference points. For example, a hi-techtravelling salesman would evaluate the advantages of a mobile phone over a landline telephone from a much differentperspective than a homebound, fixed-income, retiree. 3) People exhibit loss aversion. The pain of giving up a benefit is muchmore significant than the pleasure of gaining that benefit. For example, DIVX technology may have failed, in part, because itoffered the typical consumer no clear benefit to offset the perceived sacrifice of unlimited viewing time and the cost of having to hook into a phone line.



Switching costs are a major reason for pursuing order-of-magnitude improvements in costs, efficiencies, and benefits to the consumer. This businessstrategy has been called Andy Grove's 10x rule.

Where switching costs for a buyer are prohibitively high, the situation can be modelled as a monopoly, for a seller, a monopsony, and for both,a bilateral monopoly.

[edit]Competition, collective switching costs, and market performance Switching costs affect competition. When a consumer faces switching costs, the rational consumer will not switch to the supplier offering the lowest

price if the switching costs in terms of monetary cost, effort, time, uncertainty, and other reasons, outweigh the price differential between the twosuppliers. If this happens, the consumer is said to be locked-in to the supplier. If a supplier manages to lock-in consumers, the supplier can raiseprices to a certain point without fear of losing customers because the additional effects of lock-in (time, effort, etc.) prevent the consumer fromswitching.

[edit]QWERTY example

Competition is also influenced by collective switching costs, especially in markets with strong network effects. Collective switching costs are thecombined switching costs of all users in a particular market. For example, the Q WERTY keyboard layout illustrates the difficulty of collective switchingcosts and the problems associated with co-ordinating an escape from a collective lock-in. Since its adoption, alternate keyboard layouts have beendeveloped and used (e.g. the Dvorak layout). Individuals and firms who perceive an alternate keyboard layout as more efficient may still be dissuadedfrom choosing it on the basis of switching costs.

New users who have to choose between Q WERTY and another layout may favor Q WERTY because it dominates the keyboard layout market.Individual lock-in leads to collective lock-in as network effects drive more and more new users to adopt Q WERTY and prevent current Q WERTY usersfrom switching to another layout.

Collective switching costs affect competition by strengthening incumbents and hindering new entrants, who must overcome both the collective andindividual switching costs to be able to succeed in the market. Recognition of these switching costs has recently led to several attempts to designalternative keyboard layouts[citation needed ] which lower the barrier to entry by retaining many of the features of Q WERTY. However, none of them is inwidespread use.

Switching costs are likely to be present in a large class of markets. The importance of understanding switching costs has been emphasised with therise of information technologies, since switching costs seems to be a phenomenon that is especially strong in the information economy. Shapiro andVarian (1999) write: "[y]ou just cannot compete effectivel y in the information economy unless y ou know how to identif y, measure , and understand switching costs and map strategy accordingl y." Businesses are not the only ones who need to be aware of and understand switching costs. Sinceswitching costs affect market performance, governments and regulators also have incentives to understand switching costs in order to be able topromote competition effectively.



We also face a sunk cost because in some plans we have to pay certain amount for the cell-phone, and then everymonth there is a payment depending on the plan and on the total calls and messages sent. We don´t have to paythis money every month, it is only when we get the cell-phone. We can not be able to get back this money.

We can introduce the option of loss of the cell-phone We have a choice of buying an insurance, we have to pay $40 every month so if one day we loose or our cell-

phone or it is robbed, the cell-phone company will give us a brand new cell-phone. So we have to choices: buy the insurance, with a monthly pay of $40, and in case of robbery we get a new cell-phone, or not buy the insurance, we don´t have to pay anything every month but we will have to pay again for the cell-

phone if we loose it or robbed.

TENEMOS QUE AGREGAR QUE:

40 = 4,500 * p + 0 * (1 p)

Donde p = p2

(not loosing it)

ENTONCES p = 40/ 4,500 = .00888889



NOS DIJO QUE LEYERAMOS ALGO DE MORAL HAZARD, CREO QUE VIENE ENUNA LECTURA

MARKET, ORGANISATIONS AND THE ROLE OF KNOWLEDGE (nota 3) CHAPTER 3

The use of the bb messenger is an externality because we are affected by theaction of another person, this means that when our friends buy a blackberry wehave incentives to buy another blackberry because we can talk to them everytime,everywhere.

This is a good externality.

If we take into account the externality, we know that we get benefit with thebuying of our friends and vice versa. Everyone else affects us and we affect othersand together we make our utility functions arise. This way all together can reachedthe efficient allocation



DEMAND (nota 4) Analyzing the market of Blackberry we can say that its demand is inelastic because whenever a new cell-phone is

released, the price to charge is higher, so the quantity will be small. We can also see this because Blackberry doesn´t have too many substitutes and we know that when a product is

almost the only one, the elasticity of this market is below 1. Generally, those who buy a blackberry have a higher income that those who buy another brand of smartphones.

This is another reason why the elasticity of the demand of Blackberries is inelastic because richer people wouldrather buy an overpriced good than pay the opportunity cost of time o search for a cheaper substitute

AQUI TENEMOS QUE AGREGAR QUE: LA ELASTICIDAD DE LA DEMANDA PARA LA GENTE JOVEN ES MÁS ELASTICA PORQUE SON MAS SENSIBLES AL

PRECIO, POR LO TANTO LA BLACKBERRY CURVE DEBE TENER UN PRECIO MÁS BAJO QUE LOS OTROS MODELOS YAQUE VA DIRIGIDA A UN MERCADO MAS JOVEN

LA ELASTICIDAD DE LA DEMANDA PARA GENTE MÁS GRANDE ES MÁS INELÁSTICA PORQUE SON MENOS SENSIBLES AL PRECIO, POR LO TANTO ESTAN DISPUESTOS A PAGAR UN PRECIO MAS ALTO.

TENEMOSQUE HABLAR SOBRE SECOND DEGREE PRICE DISCRIMINATION, PORQUE ESTAMOS HABLANDO DE 2PRODUCTOS DIFERENTES, LA BLACKBERRY PARA LAS PERSONAS DE NEGOCIOS Y LOS JOVENES

Network effects The use of bb messenger is an externality because it is a network effect. An increase in the number of consumer of

the product, increases the usefulness of the product for me. If all my friends and me have bb messenger and another friend buy a new blackberry, my usefulness of the

blackberry increases for me because i´m going to be able to talk to him for free. If one person gets a Blackberry my utility gets higher because he/she will be in my contact list and I could talk to

them anytime.



ECONOMICS OF STRATEGY: CREATING AND CAPTURING VALUE (nota 6) CHAPTER 8

Blackberry operates in the industry of cell-phones. At first Blackberry was thought to be only a gadget to send and received text messages and e-mails.

In the early 90´s Blackberry was target to business people who had to be always communicated with their bosses, firms, costumers, suppliers, etc.every entrepreneurships and executive people had to have a blackberry to stay in touch all the time.

Maybe the first ones who used Blackberry were the brokers, they needed a device that allowed them to know changes in the prices of stocks, andeverything that was happening in the market. So this gadget appeared to satisfy these needs.

Recently Blackberry were just for executive people because their specialization was the speed of the e-mail, but in 2008 Blackberry launched a newmodel Blackberry Pearl. This new model was targeted for younger people who weren´t executives but that have the income to afford a Blackberry.

Blackberry Pearl didn´t have enough boom, so in 2009 Blackberry released Blackberry Curve with a more youthful look and desing. This new model was targeted for those young people who wanted a Blackberry with all their benefits of Wireless internet but also wanted a more fun

cell-phone, with different colors and applications.

Blackberry Curve is the competitor of iPhone because they compete in the same target market, even though they are very different.

All the applications and speed on internet have increased the value of Blackberry to their consumers, who are willing to pay more to have it andenjoy all its benefits.

The core competence of Blackberry is its speed on sending and receiving e-mails. No one have reached their level of speed, maybe in otherapplications, but Blackberry is still number one on getting a fast connection



NETWORK EXTERNALITIES (nota 20)

We can see that in the market of cell-phones, Blackberry in this case, appears a network externality because myutility derived from the purchase of a good increases with the number of other customers who already have thegood.

The utility of using my Blackberry is higher when someone else purchases a Blackberry, so we get a positiveexternality. Even though I don´t want to increase the utility of someone else, only by purchasing my Blackberry, Iam increasing everybody else utility.

These network effects only become important when is achieved the CRITICAL MASS. The critical mass is a certainsubscription percentage.

When the critical mass point is achieved, the value of those who own a Blackberry is greater or equal to the pricepaid for the Blackberry. At this point nobody think that Blackberry is too expensive because every penny they paidfor the Blackberry makes them satisfied.

After a lot of people buy a Blackberry and use the bb messenger, the other will follow them because they willrealize the positive utility-price ratio.

Now, the important question here is to know how the firm will attract users to reach the critical mass. One way isto persuade our friends to buy a Blackberry with unlimited internet so we can chat through bb messenger, thisway we can talk every time. This is how we, as individuals can motivate the critical mass, but the firm can also helpto reached this point: an economic strategy tell us that the firm has to build a system that has enough valuewithout network effects, this system can be built with all the value that Blackberry brings to their consumers, the

young design, the perceived status, all the applications, and the vision of being trendy. This way when more andmore people join the Blackberry world, other people would like to be part of it. But we have to be careful, not everything is great, beyond critical mass after a certain point, this network will get

saturated or congested and then no one will be able to chat or talk with



their friends. At this point an addition of an extra user exceeds the capacity of Blackberry, and theutility of every user decreases.

The types of network effect that results from the use of Blackberry are: inherent: I derive value from my use of the Blackberry. I feel happy using the Blackberry, it doesn´t

matter if I am chatting on bb messenger, I can still take great pictures, play videos, check my e-mail,etc.

network: I derive value from other people´s use of the Blackberry. This network is direct becausethe value of using my Blackberry is an immediate result of other users chatting with me trough bbmessenger.

In terms of MB, we can say that the Marginal Social Benefit of one more person joining the networkis greater than the marginal private benefit. If I join the Blackberry world the marginal social benefitis greater vs if I buy a LG cell-phone, because I won´t be able to chat with all my friends.

AQUÍ TENEMOSQUE AGREGAR LO DEL VIRAL MARKETING QUE VIMOS EN CLASE. EL CRECIMIENTO EN EL USO DE BB MESSENGER ES EXPONENCIAL, ESTO LO SABE BLACKBERRY Y SE

APROVECHA DE ESO PARA OBTENER GANANCIAS..

TAMBIEN NOS DIJO QUE PUSIERAMOS ALGO DE LA LECTURA DE ADVERTISING

the bb secret presentation

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