Sharesies: Market Shaping Strategy

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Table of Contents

Introduction
Background
A market-shaping response: Market-shaping
Market-shaping at Sharesies
A market-shaping strategy for Sharesies
Recommendations
Strategy implementation
Reference list

Introduction

The given report will primarily focus on the company called Sharesies. The main purpose of the assessment is to analyze the company’s market shaping strategies with an emphasis on the underlying mechanisms designed to increase the overall comprehension of the market forces. The company of interest is a micro-investment firm, which provides investment opportunities for individuals with fewer funds, such as youth. Sharesies face a unique challenge of a low effective customer base, which requires an additional effort of increasing awareness about investing for the majority of the population with lower funds. Therefore, the strategies are aimed to change the external factors in the market rather than a sole focus on internal capabilities.

Background

Sharesies is a micro-investing platform founded by Ben Crotty, Brooke Roberts, Leighton Roberts, Martyn Smith, Richard Clark, and Sonya Williams. The company provides services centred around providing customers with investment opportunities in New Zealand, Australia, and United States. The firm was founded in 2017 and currently has more than 50000 investors (Postlethwaite & Hennessy, 2021). The company values are continuous care, togetherness, and chasing the remarkable. The goals are to make investing more accessible and available, especially for the youth, since the latter is likely to be burdened by student debt, which makes the traditional investing measures inaccessible for the target population. The main challenges of the firm include poor saving habits and excessive consumerism of New Zealanders. In the case of savings, one of the key problems is the fact that New Zealanders primarily keep their savings in low interest savings accounts, which is the most ineffective option for growing wealth. In the case of consumerism, a vast majority of New Zealanders are not interested or educated about financial responsibility, where most of the money is spent on consumption rather than investment.

A market-shaping response: Market-shaping

It is important to note that market shaping can be defined as a strategy, where a company or firm influences the current state of a market in order to affect its trends, dynamics, demands, needs, and interests (Nenonen et al., 2019). The underlying assumption is that corporate entities, as active participants of the market, are also capable of changing the market in which they operate. Such an approach is fundamentally different from competitive strategic management concepts since the latter ones are mostly centred around identifying, monitoring, and responding to market fluctuations and alterations by implementing adaptive measures (Beninger & Francis, 2021). Utilizing market shaping strategies is important for responding to Sharesies’s challenges because the target population needs the company’s services, and the market is not fully aware of the opportunities provided by Sharesies. It is critical to assists the market in order to boost its maturation to reach the stage similar to markets in established economies, such as the US. The strategy is highly appropriate in the case of Sharesies because the company is offering services that are accessible for a wider range of individuals who are not aware that investing can be done even with smaller funds.

It should be noted that there are a number of layers within a market system. These include actors of a micro layer, a focal ecosystem of the lower meso layer, a business field of the upper meso layer, and a set system of macro layer (Möller et al., 2020). The former involves internal resources, business models, and objectives, whereas the latter includes national and economic factors, technological paradigms as well as established institutions.

Market-shaping at Sharesies

Since the company’s launch, the management’s efforts were primarily allocated towards acquiring more authority and certifications in order to be able to offer a wider range of services. For example, these include certification for becoming a Certified B Corporation, socially responsible funds, personalised financial advice, and individual equity investments (Postlethwaite & Hennessy, 2021). In other words, Sharesies’s managers worked on increasing the portfolio and categories of investment opportunities in order to make the activity more accessible. Therefore, these efforts were mostly affecting the micro layer of the market system, such as internal capabilities, resources, and positions. In other words, Sharesies mainly used a resource-based view or RBV approach without any significant focus allocation towards market based view or MBV (Purwohandoko, 2018). Managers seem to conceptualize the market as something static and non-reciprocal, for which the only solution is adaptation and adjustment of internal factors.

A market-shaping strategy for Sharesies

The recommended market shaping strategy is centred around primarily affecting the external factors of the current market system in order to introduce the necessary changes in regulations, representations, competitor network, and pricing strategy. In the case of the rules of the game layer, Sharesies requires to work towards making a vast majority of financial opportunities accessible for people with lower funds. For example, the case demonstrates that the personal financial advice rule was exempted for the company, which is not desirable since such an exemption should not take place, but rather the entire restriction needs to be removed (Postlethwaite & Hennessy, 2021). It is substantiated by the fact that in recent years “the number of consumers seeking personal financial advisory services has grown globally” (Chen et al., 2019, p. 379). It will benefit the general consumers, its customers, and the companies seeking to operate in a similar market.

In the case of the representation layer of the market shaping strategy, it is proposed to utilize social media marketing since it is the only effective solution for the company, which targets mainly younger individuals with lower funds. According to recent studies, social media influencers are becoming more effective at promoting products and services online due to increased competence, relatedness, and ideality (Ki et al., 2020). Considering the fact that the company’s services are inherently good and there are a number of strong influencers with a specific focus on personal finance, the company can achieve a new level of brand awareness not only locally but also globally. Such an approach will benefit the general consumers, the company’s customers, and micro-investing companies. It will require cooperation with bloggers, social media channels, and other online influencers.

In the case network layer of the market shaping strategy, it is suggested to make collaborative efforts with the direct competitors, which includes companies with Sharesies’s ambitions as well as future market entrants. In order to make investing more accessible, service providers need to network with their direct competitors, who seek the same objective in order to make the required regulatory changes, which will benefit all of them as well as their customers. For example, according to the theoretical concept of market based view, it is stated that the aggregate perspective can be cumulatively more beneficial in the long term rather than a short-term focus on internal systems (Dau et al., 2020). Although it might be challenging to work with competitors, in general, the collective effort will be more beneficial since many potential consumers are unaware of such investment opportunities, which means it is redundant to fight for a small number of existing customers.

In the case of the exchange element of the market shaping strategy, the focus is put on establishing a long term pricing approach. The company has a highly simplistic pricing method, where the services are free only for individuals with $50 or less (Postlethwaite & Hennessy, 2021). The incentive to try the company’s services should be stronger and more effective. Sharesies should focus on expanding the current customer base first before capitalizing on them, and since the target customers include people with lower funds, they are more sensitive to any price change in the portfolio category (Kienzler & Kowalkowski, 2017). Therefore, Sharesies should aim to build a strong customer base and accumulate a high volume of funds. In order to align the company’s interests with its customers, the company could also change pricing to be based on a percentage of growth of its customers’ funds, which will benefit both parties.

Table 1: Market-shaping canvas for Sharesies

Market layer	What could be shaped and how?	What and who benefits?	With whom to partner?
Rules of the Game	A vast majority of financial opportunities are accessible only for those who have a significant fund, which can be shaped to be available for everyone in legal manner rather than by exemption for specific cases.	General consumers The company’s customers Service providers	Financial Markets Authority or FMA
Representations	Utilizing social media marketing is an only effective solution for the company, such as Sharesies, which targets mainly younger individuals with fewer funds.	General consumers The company’s customers Service providers	Social Media Influences Online Marketing Experts Major Social Media Companies
Network	In order to make investing more accessible, service providers, such as Sharesies, need to network with its direct competitors, who seek the same objective in order to make the required regulatory changes, which will benefit all of them as well as their customers.	General consumers The company’s customers Service providers	Financial Markets Authority or FMA Competitors General consumers The company’s customers
Exchange	Create a comprehensive percentage on growth pricing system to lure more people into the investing activities by planning long term and making sacrifices in short term.	General consumers The company’s customers Service providers	General consumers The company’s customers

Recommendations

The first recommendation is focused on inter-competitor cooperation and collaboration, where Sharesies needs to initiate these efforts with its direct competitors if such exist. The existing customer base is small, which is why the lack of awareness among the general consumer population needs to be changed by making legislative adjustments first. The currently established rules are mostly beneficial for the investors with substantial sums, which limits the diversity of services available for an offer by the company. The company, as well as its direct competitors, need to focus on expanding the existing customer base available for them by establishing a fair legal basis.
The second recommendation is focused on marketing, which will also help with awareness elevation about micro-investing opportunities. Sharesies positions itself as a highly technologically advanced company aimed at the younger generation, which means that powerful online marketing campaigns can be effective at spreading the word. Using online social media influencers can prove to be a better strategy rather than sole use of conventional Google Ads since the field of finance is highly sensitive due to numerous scams and schemes. Therefore, utilizing trustworthy influencers can be more effective at increasing the customer base.
The third recommendation is centred around pricing alterations, which currently uses fixed pricing on the basis of portfolio size. Since the company targeting price sensitive consumers, it will be more appropriate to establish a percentage of growth pricing system, which aligns the company’s gains with its customers’. It will generate even more trust and make customers more willing to try the company’s services.

Strategy implementation

The concept of agile strategy implementation is aimed at being more efficient than conventional approaches, where the core idea is to test the strategy while incorporating it (Kaufmann et al., 2020). In other words, it does not use the standard step-by-step method but rather focuses on the creation of a learning cycle within the implementation process. The key incentive for such a strategy is time, and opportunity cost since Sharesies’s business model can be easily replicated, and the company can lose its first-mover advantage in a short time. For example, large financial companies can create a unique package of services for the target consumers of Sharesies, which will require less effort than establishing a new company since they can use already existing resources. Therefore, Sharesies needs to operate with urgency and efficiency in order to expand its customer base by sacrificing short term gains for growth.

Reference list

Beninger, S., & Francis, J. N. P. (2021). Collective market shaping by competitors and its contribution to market resilience. Journal of Business Research, 122, 293–303.

Chen, S. A., Makarucha, A. J., Alam, N., Sherchan, W., Harris, S., Yiapanis, G., & Butler, C. J. (2019). Evaluating goal-advice appropriateness for personal financial advice.2019 IEEE Global Conference on Signal and Information Processing, 103(3), 379-389.

Dau, L. A., Moore, E. M., & Kostova, T. (2020). The impact of market based institutional reforms on firm strategy and performance: Review and extension.Journal of World Business, 55(4), 1-15.

Kaufmann, C., Kock, A., & Gemünden, H. G. (2020). Emerging strategy recognition in agile portfolios. International Journal of Project Management, 38(7), 429-440.

Ki, C. W. Chloe, Cuevas, L. M., Chong, S. M., & Lim, H. (2020). Influencer marketing: Social media influencers as human brands attaching to followers and yielding positive marketing results by fulfilling needs. Journal of Retailing and Consumer Services, 55, 1-11.

Kienzler, M., & Kowalkowski, C. (2017). Pricing strategy: A review of 22 years of marketing research. Journal of Business Research, 78, 101–110.

Möller, K., Nenonen, S., & Storbacka, K. (2020). Networks, ecosystems, fields, market systems? Making sense of the business environment.Industrial Marketing Management, 90, 380–399.

Nenonen, S., Storbacka, K., & Windahl, C. (2019). Capabilities for market-shaping: Triggering and facilitating increased value creation. Journal of the Academy of Marketing Science, 47, 617–639.

Postlethwaite, S., & Hennessy, P. (2021). Creating the most financially empowered generation. Sharesies.

Purwohandoko, P. (2018). Enterprises performance through internal resource integration and market orientation based on competitive advantages. Scientific Journal of Accounting and Management, 15(1), 61-70.

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