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    Target The Right Market

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    abooosy
    The software company debates whether to target small businesses (Sams) or large businesses (Marys) with their online marketing software. Targeting Sams offers a larger potential customer base of 1.3 million but each customer has lower profits of $10k and high churn. Targeting Marys has less than half the potential market size but longer customer retention, higher profits of $50k per customer, and lower churn. An option is targeting both markets but that would spread resources thin and require more intense marketing and development needs.

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    Target The Right Market

    Uploaded by

    abooosy
    3K views7 pages
    The software company debates whether to target small businesses (Sams) or large businesses (Marys) with their online marketing software. Targeting Sams offers a larger potential customer base of 1.3 million but each customer has lower profits of $10k and high churn. Targeting Marys has less than half the potential market size but longer customer retention, higher profits of $50k per customer, and lower churn. An option is targeting both markets but that would spread resources thin and require more intense marketing and development needs.

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    Target the Right Market

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    The software company debates whether to target small businesses (Sams) or large businesses (Marys) with their online marketing software. Targeting Sams offers a larger potential customer base of 1.3 million but each customer has lower profits of $10k and high churn. Targeting Marys has less than half the potential market size but longer customer retention, higher profits of $50k per customer, and lower churn. An option is targeting both markets but that would spread resources thin and require more intense marketing and development needs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    3K views7 pages

    Target The Right Market

    Uploaded by

    abooosy
    The software company debates whether to target small businesses (Sams) or large businesses (Marys) with their online marketing software. Targeting Sams offers a larger potential customer base of 1.3 million but each customer has lower profits of $10k and high churn. Targeting Marys has less than half the potential market size but longer customer retention, higher profits of $50k per customer, and lower churn. An option is targeting both markets but that would spread resources thin and require more intense marketing and development needs.

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    Target the Right Market

    A software company debates its strategic focus


    by Jill Avery and Thomas Steenburgh
    SparkPlace
    A two year old provider of online marketing software.
    Software lets customers manage and measure the
    effectiveness of their marketing approach.
    Software available for a monthly fee Software available for a monthly fee
    Limited resources
    Focused on growth
    Marketing Dilemma
    Sams Marys
    Size < 20 employees 20-100 employees
    Potential market size 1.3 million <.5 million
    Av. Costs/Customer $1,000 $5,000
    ROI on each $ spent in
    marketing
    $5 $2
    marketing
    Sale effort Low High
    Average Profits in a life
    time
    $10K/Sam $50K/Marry
    Avg. Customer life cycle 3 months Long term
    Churn rate High Low
    Argument made by Josh Head of Marketing
    Argument made by Jane Sales Director
    Sams
    Pros Cons
    1.3 million potential
    customers
    $1 Marketing = $5 profit
    Lower customer retention
    Profits are only $10k
    $1 Marketing = $5 profit
    Less complex software needs
    Less competition from other
    marketing firms
    Sales cost are $1000
    Marys
    Pros Cons
    Longer customer retention
    $50k profit for each
    More invested in product;
    Less than million potential
    customers
    $1 Marketing = $2 profit
    More invested in product;
    easier to upsell
    $1 Marketing = $2 profit
    More complex software needs
    More competition in the
    space
    Sales costs are $5,000
    Target Both Markets
    Pros Cons
    Greater potential market
    Greater overall profit
    potential
    Spreading resources thin
    More intense marketing
    needs potential needs
    More intense development
    needs
    WHICH MARKET WOULD YOU TARGET!

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