Datavast Inc.: The Target Segment Decision
(6 pages of text)
Datavast Inc., a product designer and manufacturer based in China, had just launched its new private cloud storage product, the Data Security Box. The general manager of Datavast was faced with the dilemma of who to sell this product to. He determined that segmenting by size was the most effective method, as customers in different industries and regions did not have very different needs or buying characteristics. However, SMEs (companies with 200-500 computers) and large companies (companies with 1,000+ computers) exhibited vastly different needs and purchasing behaviour. The general manager had limited resources, so he faced the decision of focusing on either SMEs or large companies. Although Datavast did not have any direct competitors at the time, its decision was complicated by the company’s current state and capabilities, as well as the data storage industry in China. Also, the general manager was hoping to retire within five years and was unwilling to make additional capital investments in the company. Datavast was operating at a loss and his goal was to bring the company into profitability within the next year. A net loss also meant that the company could not afford to be burdened with large additional expenses. Lastly, private cloud storage was a new technology in China and the market needed to be familiarized with the concept.
This case fits well in a B2B marketing course at the MBA or undergraduate level. It is appropriate for early in a course when analyzing target segment selection or at the end of a course in a wrap-up module when the discussion includes implementation plans. This is also a good case to use to emphasize strong analytical processes, e.g. defining the decision criteria before analyzing the alternatives.
Additional learning topics include:
- The added challenges of first movers in a new category as well as the opportunities to influence market norms in new categories.
- Overcoming the adoption chasm in a B2B environment.
- The cash flow constraints, finite resources, and management preferences that heavily influence strategic flexibility in a small firm.
Information, Media & Telecommunications
China, Small, 2011
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