According to Hao in the case Datavast Inc.: The Target Segment Decision, Datavast had been established five years ago to offer cloud-computing services. The firm had just adjustments to its original product and, therefore, the management felt it was the right time to gain penetration into the market using their refurbished product. However, the challenge that was eminent was the target market choice considering that the general manager was contemplating whether to focus on small-to-medium segments businesses that would be sensitive to the set prices or to focus on big corporations segment that allowed quite higher unit contributions.
Criteria That Will Be Used In the Decision Making Process
First, Supply chain is a factor to be considered by the firm, as it will have to compare the services offered by systems integrators and IT Suppliers in terms of their markup price margins. Second, the firm will also have to consider the number of sales that will be attained because it is through increased sales that it can attain greater profit margins. In that, SMEs will lead to increased sales because of short supply cycle while large corporations will lead to decrease sales because of the complicated supply process. Third, the company needs to consider the capital it will require to produce its products considering that SMEs will require less sophisticated Security Data Boxes that are less expensive to design. On the other hand, large corporations will require more sophisticated Security Data Boxes, which implies that the firm will have to invest more in its production.
Key Characteristics of the Industry
The industry comprises of information technology companies that make use of back up services ranging from small-medium businesses to large corporations that were differentiated on the basis of their need for storage services. Small-medium businesses could further be categorized in terms of the backup methods considering that twenty percent of them still used CDs and DVDs for backing their data, forty percent of them who had more data to store made use of external hard drives, and the rest did not back up their data. Therefore, there was great opportunity for doing business if the firm targeted the small-medium businesses because data security box offered a more superior and secure means of storing data. On the other hand, large corporations were making use of integrated backup systems that were supplied by established firms like IBM, but the firm Datavast could focus on their storage of non-sensitive data that were being stored using archaic means. The popularity of cloud computing in the industry was very low, as businesses did not trust the idea of their information being stored outside their security of their information systems. In terms of supply, IT suppliers and systems integrators dominated the industry with the latter being mainly used by large loyal large firms while the former was uses by SMEs who were not loyal as they went for the ones who had better prices.
Datavast Inc. SWOT Analysis
SWOT analysis is an important business analysis tool because it enlightens the firm’s management on the what is taking place both within and outside the organization; hence, making it possible to overcome rivals in the industry.
Strengths
The main notable strength of the firm is their product that is differentiated from products of rival firms in the market because data security boxes are unique to the firm.
Weakness
However, the firm is least known in the industry because it has done very little in terms of advertisements and promotions and, therefore, it will take significant time for it to gain popularity. Additionally, the firm has very little information on the present customer radar considering that the innovated product is still new on the market with and no sales have so far been made.
Opportunities
Opportunity is presented by the many small-medium businesses that are using archaic methods to store their information considering that the data security boxes are more secure, and large corporations that are using outdated methods to store their insensitive data. Additionally, the business can invest more in advertisement and promotions in order to create brand awareness and make both large and small business try its product.
Threats
The eminent threat for Datavast Company is the various established companies that offer integrated backup systems to large corporations while there is no threat when it comes to small-medium businesses.
The More Potential Target Market
Datavast Company is contemplating on whether to target the small-medium business or focus on large corporations considering that the size of the company was a great determinant of the resources that the company would require. According to the firm’s selection criteria, SMEs offered the best market segment option to venture in even though such businesses will very sensitive to prices. First, directing the business on SMEs will reduce the capital that the business will need to invest in the design of data Security Boxes. Second, dealing with SMEs will ensure that the business increases it sales because the sales cycle will be shortened as compared to that of large corporations that is estimated to take about three months. Additionally, the firm will have to deal with IT supplier to ensure that their goods reach their right destination who will only mark up the price slightly considering that SMEs are price sensitive.
Characteristics Influencing an Innovation’s Rate of Adoption
Relative advantage: Data security box are better than the CDs, DVDs and external hard drives that are being used by SMEs; hence, their adoption is very likely.
Compatibility: The target group is SMEs who have shy off from cloud computing because they want their data to always be within the firm, and data security boxes will work to ensure that information is not only within the organization but is also secure (Kotler, 2000).
Complexity: The use of data security boxes is very easy because they will act as external data storage devices that are able to store huge amount of data and encrypt; hence, customers will easily learn to use them.
Divisibility: Security Data Boxes are simple methods of storing data and can be experimented on a limited basis for the target customers to be aware of how it works.
Communicability: the use of Security Data Boxes can easily be communicated through the social media and even be demonstrated during advertisements and promotions so other people can also view it.
Risk: The idea of adopting the Security Data Boxes will ensure that the customers have a good experience as it poses no threat to the operation of the customers.
In conclusion, Datavast Company that has been in the information technology industry for five years had been making a loss prompting the firm to re-invent its product that has resulted to Security Data Boxes. Therefore, the firm has been contemplating on which market segment it should enter with the two options being large corporations and SMEs. According to the provided information, the information technology industry is filled with firms that do not trust cloud computing and are using data storage services that ensure information is kept within their information systems. One strength of the firm is the fact that its product is unique as compared to those of its competitors, but it needs to increase it advertisement efforts. Of the two market segments, SMEs stand to be the most ideal because they will ensure that the firm increases its sales due to the simple supply cycle and reduce capital needed in the production of Security Data Boxes.
Reference
Kotler .P. (2000). Marketing Management: Millennium Edition. Boston: Prentice Hall PTR.
