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The problem of targeting the right market is often faced by developing companies which need to choose the effective marketing strategy in order to gain more profits, address the mission, and work for the potential growth. The purpose of this paper is to analyse the options available for SparkPlace, a two-year-old company producing software, regarding the target market to choose and to propose the strategy to follow.
Background
SparkPlace promotes the permission-based marketing and proposes software which is used to organise marketing activities in different organisations. The company’s slogan is “Marketing is broken” (Avery and Steenburgh 119). Currently, SparkPlace orients to two markets representing small businesses with fewer than 20 employees known as ‘small Sams’ and larger businesses with 20-100 employees known as ‘medium Marys’ (Avery and Steenburgh 119). These customer segments are rather different, and they are characterised by such details:
- Sales costs regarding Sams are $1,000, when sales costs related to Marys are $5,000.
- Sams use the company’s services during three months, Marys stay with SparkPlace longer.
- Sams are associated with potential profits, when Marys are profitable today.
- There are 1.3 million Sams and half a million Marys.
- Sams guarantee $10K of profit, when Marys guarantee $50K of profit.
- Sams guarantee the high return on investment, when Marys can pay higher for products (Avery and Steenburgh 119-120).
Problem Identification
Both customer segments demonstrate significant advantages and potential for gaining profits. However, it is rather challenging for SparkPlace to address both the markets simultaneously. The problem is in the necessity to choose the target market to orient in order to contribute to the business’s value and follow the company’s mission. Numbers related to Sams and Marys cannot point directly at the right solution.
Issue Analysis
To provide the solution to the issue, it is necessary to conduct the SWOT analysis of the SparkPlace’s business.
- Strengths:
- SparkPlace uses the unique marketing strategy oriented to using social media and principles of the permission-based marketing.
- SparkPlace offers software developed according to the principle of easiness attractive for Sams.
- Weaknesses:
- Significant dependence on customers because of the weaknesses of contracts and terms related to working with Sams.
- Opportunities:
- Increase in the market share.
- Development of more competitive products.
- Threats:
- Failure to compete within the actively developing industry.
Conclusion
Both Sams and Marys provide SparkPlace with the opportunity to gain more profits and grow within the market while focusing on the company’s specific mission. Sams are more interesting while focusing on the perspectives and future potentials. However, Marys provide significant profits today and can stay with the company longer. Furthermore, Marys are more challenging customers, and they contribute to developing the company’s competitive advantage. Nevertheless, Sams are cost-saving and correlated with the company’s mission. Thus, it is impossible to choose one right variant without losing many benefits providing by the other customer.
Recommendations
- SparkPlace should not choose only one market to target because of the threat to lose significant benefits proposed by both markets.
- It is necessary to orient to Sams as the segment which addresses the company’s mission and easy to work with. Sams can guarantee significant potential profits in short terms.
- However, it is also necessary to work for Marys while following the strategy similar to differentiation strategy. Marys are the reputable clients which can pay higher prices and guarantee more profits. Furthermore, many Sams are potential Marys, and SparkPlace should have the opportunity to work with these companies at all stages of their development.
- Two marketing teams should work with these segments because of the necessity to address the unique needs of both markets.
Works Cited
Avery, Jill, and Thomas Steenburgh. “Target the Right Market”. Harvard Business Review 90.10 (2012): 119-123. Print.
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