Read below case and answer below questions:-
Q1 How else might SM Scanning have gone about finding markets for their services?
Q2 Based on the evidence above, what other issues do you think SMS faces and what other help/type of consulting project might you suggest?
Q3 Prepare a proposal on how you might help them as a consultant.
SM Scanning (SMS) was set up in 2014 by two brothers, Jake and Sam, both with INSEAD MBAs. They had spotted an opportunity in the market place for small and medium-sized companies to use social media data analytics to help with all kinds of market research and to give strategic insights.
Unlike traditional marketing research, this type of data analytics helps organisations cap ture, measure and analyse social media data. This enables a closer understanding of social conversations and trends, for example. Using this data, models can be built to help predict behaviour and so give insights into possible courses of action. The speed and responsiveness of this approach is one of its greatest assets though one of the perceived downsides is the inability to know what might be the exact outcomes of the analyses given that it is totally dictated by the users of social media. The concept behind SM Scanning was to offer not only ‘data mining' but also a consultancy service suggesting exactly what to do with the data extracted - a service not often provided by the large data analytics organisations.
The brothers knew that the biggest companies could afford to buy the software needed both for data mining and the associated analysis but smaller operations could not. Without doubt, the two felt that smaller organisations could make better-informed and more up-to the-minute decisions if they were helped by an organisation that had access to the software and, without the need to acquire it, offer insights based on that data.
The plan was to lease and then possibly buy the rather expensive software, depending upon the economics, as the company grew. They would then carry out specific, tailored research and build a consulting company designed to use the outcomes to help develop, build and refine strategies and develop specific responses to key developments in the marketplace. Examples included tracking brand reputations and providing almost instant market feedback on specific events like product recalls. The key difference to the larger, existing competition was to be the strategic analysis of the markets and the consulting offering built on this.
The brothers had the benefit, between them, of having lived and worked on four continents. They were multilingual, young and able to devote their time to their embryonic business. They had complementary skills too: Jake was an adept salesman and Sam an excellent and broad technologist and project manager. Between them, they had previously worked in a wide variety of industries including data analytics. Coupled with the skills honed on their MBA courses, they felt they were well equipped to spearhead this concept.
From the start they had clear ideas on market analysis and segmentation but soon the issue of addressable markets (those that might be interested in the offering) and what they might actually win over arose. The key question was which companies and which Departments within those companies would be most likely to buy their servicesThe markets for their services were very diverse. So after trying the more traditional approaches, by sector, for example, they looked at the more modern segmentation methods such as those used in the US by futurists with their ‘trend banks' and created their own versions to help identify potential seams for their work.
Initially, they succeeded in getting in front of some bigger companies still not penetrated by the larger data analytics outfits as these seemed good first targets with money. However, once introduced to the concept, these companies were indeed keen to buy the software for themselves. They recognized the strategic nature of such a purchase and were loath to out source this.
At the smaller and medium end of the market they were similarly successful in securing quality meetings. Jake, the salesman, rarely failed in getting in front of the right people and Sam, the technical guru, produced excellent, up-to-the-minute, relevant insights. But here too, despite all their efforts, over and over again they met with only modest success - not in keeping with their expectations.
But undeterred and ever proactive, they called upon a group of friends whose backgrounds might help them to challenge their thinking and suggest how they might improve their success rate.
Some of the feedback included identifying that:
There were a couple of large players in the market (for whom this business was small) and a few very small players suggesting that the overall market was not (yet) large. This raised the question what actually was the size of the current market for the productsWere SMS actually creating a market that didn't exist?
Target industries still included a large number of very big companies. Was it wise to be ‘distracted' by them given their longer-term intentionsAs a small start-up, would SMS have credibility with themWas this just a market entry tactic?
One view of the market suggested that it existed because the software products did not do their jobs properly - selling ‘basic' software was not enough. The products needed to be more customer-oriented. Once rectified, the supposed niche would no longer exist.
Clients were not using the power of the software as they might - buying the software but not analyzing it. What if SMS focused on just data analysis, was this an opportunityWho were the buyers within the organisationHow were they responding to the product conceptWere they threatened by itWould they do better in other countries?
SMS pricing looked high compared to the cost of the basic software. It seemed very unlikely that clients would pay as much for the ‘data analysis plus' as for the product.
Was it a technical issue With increased focus on full data integration was data analysis being squeezed out from the middle?
Were the advertising agencies the problem They provided reports as part of other con tracts and were known to control the market, but had set low expectations of what was possible using cheap tools this meant clients were not interested.
What problem was SMS actually resolving Perhaps social media was just not a priority.
SMS's few successes had come where there was a personal, strong connection with an indi vidual - an introduction to a business known to ‘feed' off positive feedback from social media:
nights clubs trying out new formats or menus
views on mobile and phone banking services
restaurant chains with topical or seasonal offerings
new product releases: fast feedback
useful for Corporate Social Responsibility work and reputation analysis.
One of the key outcomes of the individual discussions asked: were SMS creating a market rather than just finding one. Were they ‘crossing the chasm' rather than, as they had believed at the outset, in ‘the bowling alley'?
Jake and Sam, still determined but now confused, wanted to grow the business. Their key backer decided some objective assessment of where they were going was required so called you in.