To compare, both forms of marketing can be visually appealing and entice consumers to invest in a product or service as long as the outbound marketing is a print ad or television spot. Both also have the opportunity to be informational depending on the length of the outbound advertisement. In contrast, there are many differences that make inbound marketing more efficient than outbound marketing. For one, visual appeal of outbound marketing must be attributed to television and print ads, which can be costly for a business.
Inbound marketing on the other hand caters to particular argue markets in order to find promising leads while outbound marketing caters to a vast array of consumers. The biggest difference though is that inbound marketing simply has more strengths. It can be cheaper, easily distributed, and allows small businesses to compete with large businesses on the same playing field – the Internet. For the reasons presented above it makes more sense for businesses to focus on inbound marketing as it is more efficient in terms of maximizing profit and not wasting valuable time when competing with other firms for consumer loyalty.
With that being said, if “Big Data” were involved, it may be wise for businesses to also use a few outbound marketing tactics because they will be able to focus their advertisements through cold calls and emails using an individual’s shopping habits and personal information. When considering their options, Hubbubs should focus on using inbound marketing while strategically including some outbound marketing techniques. 2. ) Hubbubs is facing segmentation and targeting challenges. They are currently serving different segments with different needs and different ideas about value.
What advantages and disadvantages does this current strategy present for Hubbubs? (Include cost/benefit analysis, implications for product design, pricing strategy, customer retention, & growth expectations at a minimum). According to the information provided in the Hubbubs case, the firm is currently catering to two distinct target markets. One is the smaller business with roughly 25 or less employees, and the other is the larger business with more than 25 employees. The advantages and disadvantages of these groups are as follows: Currently Hubris’s client base is made up of 73% small businesses.
The actual number Of clients in this category is 694. At a cost Of $1 ,OHO for each small business acquisition, Hubbubs has spent approximately $694,000. The other 27% of Hubris’s clients are large businesses at a total of 255 clients. Each of these was acquired at a cost of $5,000 for a total of approximately $1 It cost Hubbubs almost double the amount of money to acquire almost one-third the amount of small business clients. These numbers make it apparent that it is clearly a disadvantage to target large businesses as it costs Hubbubs so much more money to acquire them as clients.
It would be advantageous for Hubbubs to focus on targeting small businesses to decrease costs. This also creates advantages in the implications of their product design. By focusing on small businesses, Hubbubs can cater their product and services to fit the needs of their clients. This means they can forgo added tools in their software, as these small businesses are more interested in acquiring leads in hopes to earn loyal consumers. The disadvantage in this is that Hubbubs would not have the tools needed to help larger businesses analyze their marketing efforts.
By focusing solely on small businesses, Hubbubs would impolitely lose an entire market segment and create a reputation of supporting only small businesses, potentially decreasing profits. In focusing entirely on small businesses, profits would fall, as the retention rate is lower for those businesses. Since small businesses have a churn rate of 4. 3%, Hubbubs is not able to keep these businesses as paying clients for as long as they keep larger businesses. With a $500 start up fee and $200 per month paid by small businesses, Hubbubs can regain the money spent in acquiring the client, but not make a huge profit.
Since larger businesses have lower churn rate, 3. 2%, and pay a higher monthly fee, Hubbubs may be able to make more money off of them but in the long run but not recover costs because the acquisition fee for large businesses is much greater. From this analysis it is more advantages for Hubbubs to focus on small businesses even though their churn rate is higher. Finally, Hubbubs appears to have increased its customer base rapidly before the final three months of the 2008 calendar year, 65 in September to 108 in December.
The majority of these businesses are smaller firms with less than 25 employees. This information is advantageous because it shows that Hubbubs is targeting small businesses well and those businesses are responding positively to their product and services. If Hubbubs can cater specifically to a certain target market and/or segment, one that is cheaper to acquire and still relatively popular, then the only disadvantage they have would be the inability to expand their services to larger, more profitable businesses. 3. What is the rationale (provide reasons) for choosing a narrow focus of Owner Allies over Marketer Marry, and then the reasons for choosing Marketer Marry over Owner Allies? This should include customer needs, infrastructure, CLC (customer lifetime value), market size, churn rate, acquisition costs and other differences between the groups. Hubbubs seems to be in a position where they are choosing which market segment they wish to serve over another. On one hand they can cater more to small business owners and on the other they can serve larger, marketing driven companies.
There is adequate rationale for serving each industry, but they must be analyzed one at a time. In serving small business owner clients, “Owner Allies”, Hubbubs is dealing tit a client who has limited time and resources to generate solid leads. There are many hands doing many different things in a small business and they do not have time for in-depth analyses of their marketing efforts. This could attribute to Hubris’s retention rate for these businesses. They want quick results and then need to move on.
With that being said, the customer lifetime value is much smaller for these smaller businesses. In part because of a higher churn rate, their CLC comes out to approximately $3,651. Although it is smaller in comparison to a larger marketing driven business (CLC -? 10,625), Hubbubs is still recurring its acquisition cost and making a profit. The market size for smaller businesses is also much larger than that of larger businesses. According to Hubris’s numbers on market potential, roughly 1 of the 2,289,023 businesses are small to very small in size.
This means that Hubbubs would have a greater amount of potential clients if they chose to cater to smaller, owner driven businesses. Even with a higher churn rate of 4. 3%, there are plenty of businesses Hubbubs can acquire after some businesses cease their partnership with the firm. There are fewer reasons Hubbubs would choose to focus on larger marketing driven businesses but there is a key factor that small businesses do not have. If Hubbubs is able to retain the business of these larger firms, they will receive a greater return on investment, increasing profits, than if they focused on just small businesses.
Hubbubs would also be able to further develop their software and services as larger, marketing driven firms, Marketing Marry, need assistance in running programs, evaluating results, and justifying ROI with senior management. Since a marketing staff supports Marketing Marry, Hubbubs would be able to develop its product and services into one that is more technologically advanced. They could in turn appeal to larger, more influential corporations, but this would undoubtedly come with a higher acquisition cost.
Given this information, the CLC is much higher for Marketing Marry (S 1 0,625) but their market size is significantly lower at roughly 61 2,893 of 2,289,023 businesses. This means that Hubbubs would have to put up with greater competition from competing firms for these more limited larger businesses. Again, with a lower churn rate for larger, marketing driven businesses, 3. %, Hubbubs may be able to reap higher profits by focusing on larger firms if they can retain their business for a longer period of time. 4. ) What is the rationale for choosing BIB over BBC customers, and then BBC over BIB customers?
This should include customer needs, infrastructure, CLC (customer lifetime value), market size, churn rate, acquisition costs and other differences between the groups. In the Hubbubs case report, much less information was given in terms of comparing the firm’s decision to focus on BIB or BBC corporations. Still, with the little information given, comparisons and contrasts can be made in order o provide Hubbubs with an idea for which type of business firm on which they should focus. Hubbubs should most likely choose to focus on BIB corporations rather than BBC corporations.
Since BIB companies are said to have little experience with marketing efforts it could prove to be a prosperous venture for Hubbubs. More attention is required which would lead to a greater and longer customer relationship. This would increase the value of a Bib’s CLC for Hubbubs. Bib’s also find greater value in inbound marketing which is the basis of Hubris’s infrastructure. Since Bib’s often create employ products, they are more selective about their sales force and can benefit more from the services Hubbubs has to offer.
In terms of CLC, the number of customers Hubbubs has that are BIB and BBC are very similar to the type of businesses they have, owner based and marketer driven. At 647 BIB businesses and a low 3. 3% churn rate, the CLC would be lower than the CLC of its 302 BBC businesses with a 6% churn rate. With this though, Hubbubs has a greater ability to create lasting relationships with their BIB clients so if they can retain their business for a greater amount f time they could rake in higher profits. The last bit of information given is the churn rate of both BIB and Bib’s.
Bib’s have a much lower churn rate at 3. 3% which means Hubbubs retains these businesses for longer periods of time. BPCS churn rate is much higher at 6%, which is probably because BPCS tend to be more sophisticated. The case mentions that many BBC clients thought that their templates were too “rudimentary. ” These businesses already had highly functioning websites and simply didn’t need the support of a second party to aid them in their marketing efforts. Due to the information given, it really is not rational for Hubbubs to choose BBC clients over BIB clients.
The facts presented in the case study seem to indicate that the BBC businesses Hubbubs did have as clients simply didn’t have a need for their product and services. They were highly functioning businesses on their own and did not need the help to increase profits and leads. This lead to Bib’s higher churn rate. They also made up a smaller percent of customers than BBS. For these reasons it is not logical to think or reason that Hubbubs would decide to focus on recruiting BBC businesses over BIB businesses.