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Datavast Inc.: The Target Segment Decision Case Solution

Solution Id Length Case Author Case Publisher
1269 1708 Words (9 Pages) Michael Taylor, Maggie Hao Ivey Publishing : W12436
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The database is a local IT solutions provider in the Chinese market which is dominated by large foreign players. The company has had an innovative streak and seeks to provide the most compatible and easy to use solutions to customers. However, because it is relatively new and small, it has built little credibility. Partnering with a known and popular telecom player to push its idea of public cloud computing was met with suspicions, after which it decided to engage in providing customers with private cloud computing. Cloud computing is a new idea in the chines business markets, and the unawareness of market players regarding the same has made it difficult for them to accept is as a viable solution for data backups. Moreover, since the buying behavior of the players does not differ regionally or industrially, Datavast needs to segment the market based on size. This segmentation is important because it will determine the company’s profitability for the next year, as well as hold a significant impact in the general manager’s retirement plans in the next five years.

Following questions are answered in this case study solution

  1. Executive Summary

  2. Introduction 

  3. Case Analysis

  4. Deciding The Target Market

  5. Way Forward

  6. Conclusion 

Case Analysis for Datavast Inc.: The Target Segment Decision

Introduction

The Chinese market and business environment are increasingly being tainted with forces of uncertainty. Businesses, which are becoming dependent on soft data and data collection for everyday decisions, seek to have reliable and secure backups for their data (Schell, 2015). Among other IT companies present in China, Datavast Inc. is a product designer and manufacturer of data storage facilities that is based in China. The company has recently launched Data Security Box – offering storage solutions through private cloud computing. Private cloud storage system refers to an off-location database that is designed and used by a singular company to store relevant data, which is then made available to end users via the internet from any location(Smoot & Nam-Kee, 2011). The GM of Datavast, Hao, is challenged in selling the product owning to a number of factors. Since the product concept is new, the market will need to be educated and familiarized with private cloud storage. Hao is also faced with the dilemma of who to market and sell the product to; SMEs or large companies? Both have different buying needs and behavior pertaining to storage products. The SMEs are price sensitive and do not engage in huge capital investments (Ovum, 2009). Because of limited resources available, Hao could focus on wither SMEs or large companies – both coming with individual benefits and cons. The decision is an important because the company is presently restricted financially and is operating at a loss. Hao hopes to turn the company around to profitability by next year without having to make any additional capital investments which would hamper his retirement plans. Ensuring the company is able to make profits by next year is also critical for Datavast in order to support its expenses.

Case Analysis

SMEs vs. Large Companies

SMEs in China are price sensitive. If Datavast preferred SMEs as the target market, it would have to offer the data security box at discounted prices. However, the SMEs needed a standardized product, and Datavast would lower costs in creating and delivering the standard product offering. Moreover, SMEs offered a faster selling cycle, and Hao estimated that the completion of sale along with receiving of payment would not take more than three weeks. This would ease the cash flow cycle within the company. Knowledge of IT solution providers was low and their recommendations held little value to SMEs.

Comparatively, large companies presented the need for the data security box for their non-core data. These companies largely used integrated back-up systems. Moreover, large companies worked with bigger brands such as IBM and Cisco, compared to which Datavast was a small and relatively new supplier. The database would not only face problems in proving is credibility for taking orders, but will also have to provide customized products and offerings. The selling cycle also took longer, going up to three months which would restrict the internal cash flow for Datavast. The only advantage that large companies offered was of higher profitability, which would have to be shared with SIs (system integrators) who would be given a higher margin In order to push Datavast’s services and products to potential clients.

Datavaste and The Data Security Box: Key Issues

Though relatively small compared to other known players in the market, Datavast had the advantage of having no direct competition in private cloud computing. Moreover, this also gave it a first-mover advantage and a largely untapped market which could go on to become long term loyal customers. However, in order to reap the benefits of the first-mover advantage and sustain this advantage, Datavast will have to ensure that they develop strategies according to the changing market conditions (Suarez & Lanzolla, 2005).  However, Datavast would have to educate and familiarize the market with the product in order to build sales. Moreover, in order to market and push its product, it would have to partner with IT suppliers for SMEs and Sis for large companies. This partnering will lessen the direct control over the product as well as bring a reduction in the profit margins, which would then be shared with these distributing partners.

Deciding The Target Market

Based on the information and Chinese market trends, Datavast should target large companies as they offer more opportunities for success to Datavast. SMEs are late adopters and have limited data storage needs based on the nature of their industry. Compared to these, the large companies are not only early adopters but also present the need of needing secure data backups that are customized for the business needs. Private cloud computing offers the right solution at a desirable price for Datavast. Moreover, the Sis who push IT solutions to large companies can be partnered with as their knowledge regarding the industry, its needs and various products that can be used to satisfy those needs is superior. Maintaining good ties with the channel supplier, in this case, the SIs would be critical for Datavast. For Database, selling to large companies would be lucratively profitable even after expensing for the basic product costs and Sis commissions. Moreover, large companies would need the private cloud computing for non-core data storage and will be able to offer flexibility, affordability and easy access to these companies – without becoming a direct competitor with bigger market players such as IBM.

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