Target

Target the Right Market

Student Name

Case Study

Date

Target the Right Market

SparkPlace is a two-year-old online marketing software provider facing a strategic decision about its future. The company’s software provides customers with a simplified way of coordinating marketing activities and allows customers to manage and measure the effectiveness of blogging and social media marketing strategies. SparkPlace currently serves two markets – small businesses with fewer than 20 employees (“Sams”), and medium businesses with between 20 and 100 employees (“Marys”). Management at SparkPlace is evaluating whether it should continue serving both the Sams and the Marys or whether it should begin focusing exclusively on the Sams in order to grow the business (Avery, Steenburgh, Martin, & Volpe, 2012).

Description and Analysis

The Sams and the Marys provide SparkPlace with different advantages and risks related to account volume, ease of closing deals, initial investment, lifetime account profit, outside competition, and longevity. SparkPlace can do a higher volume of small business accounts because there are more Sams than Marys in the market (1.3 million versus 500,000) with the number of Sams on the rise due to the economy leading more people to start their own businesses. Sams are typically owner run and managed making it easier for SparkPlace to identify the decision maker and close deals with them, while Marys are typically run by senior managers making them less accessible for deal making. Sams are easier to bring on board as they only incur sales costs of up to $1,000 compared to Marys, which cost up to $5,000. However, Sams only bring in $10,000 in profit over the account lifetime while Marys bring in $50,000 due to higher monthly rates and longer contract durations. Finally, SparkPlace faces less competition with the Sams than with the Marys, and Sams typically only sign three-month contracts whilMarys not only stay longer but also require less.