Target the right market is a case study which presents the dilemmas that real companies’ leaders encounter when faced with the dilemma of choosing the right market. The fictional case study is authored by Jill Avery and Thomas Steenburg and talks about the Sparkplace, a two-year-old business with a sellable new product; a software which controls and measures the efficacy of permission-based marketing crusade for social media. The company finds itself in a dilemma on which customer segment to divert its strategy. Each segment has its advantages, but the company may face considerable challenges if it focuses on developing the product and marketing to both the segments. The question for which people try to get a solution in this dilemma is whether or not the company should focus on both the two companies or if it should focus on one segment and which segment precisely the company should target.
In my view, SparkPlace should focus on a single market and Marys, in particular. In this type of business, three issues underline most of the lifetime values for the customers, the upgrade rate, the cancellation paid as well as the price paid. If for instance, five percent of the customers cancel their subscription and a much higher percentage upgrade, the company may have to make up for losses. The Marys have lower rates of cancellation. Besides, they pay higher prices than Sams. There is also a likelihood of purchasing additional services since they have larger budgets to use on the software. With the correct product, the possibility of increasing value is more with Marys than with the Sams. Besides, since Sparkles is just two years old and not so much established, it cannot satisfy everyone. For that reason, it is essential that they focus and accurately choose one. The company should identify where the resources are scarcest like product development, sales or marketing and focus them on a single market. They should develop the product for Marys and use more resources for sales and marketing to sell the product to the other segment.
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