• The target market for Butterfly can be further broken down into mobile and stationary markets. The mobile market would be classified as users who access Butterfly primarily from smart phones or tablets, while the stationary market would be for users who prefer to use Butterfly from the home or office. These two market classifications would apply to both small business owners/managers and individual users. For the mobile users, an app can be developed to monitor social media on the go through smart phones or tablets. Another potential option for mobile users would be to send automatic emails or updates through apps to keep customers updated.
How should Karen go about positioning Butterfly to its targeted customers?
• Karen should position Butterfly as an inexpensive and user friendly brand. With the nearest competitor pricing their product at $29.95 per month, the price for Butterfly services can be set below this rate and still maintain a profit. Therefore, price, ease of use, and user friendly features would be Butterfly’s primary competitive advantage. The personalized and local focus of Butterfly would further differentiate the brand from its competitors.
• No additional market studies should be conducted or purchased since Karen already researched individual’s use of social media monitoring services.
• In the beginning, the focus should be on building consumer volumes. Pricing can later be divided up into different service levels as upgrades and premium options become available. As Karen’s business grows, she can increase her advertising funding in an attempt to further inform her target market about Butterfly.
• In order to properly market Butterfly, Karen must use a slogan or catch phrase to connect her target market to the product. The slogan “Monitoring those who are monitoring you” should be used in Butterfly’s initial marketing campaign.
How should Karen price a subscription to Butterfly?
• Karen should offer Butterfly’s subscription fees at $25.99 per month. Again, this price rate will lead to a competitive advantage for Butterfly and help market the brand to its target market of small businesses and individuals. Though the competition is offering their product at $29.95, Butterfly can be profitable at the $25.99 rate with the goal of 4000 subscribers in the first year. The rate of $25.99 will serve as the introductory rate and will become the base price when upgrades and premium subscription options become available in the future.
Given a time frame of 5 years, what is approximate lifetime value of an individual customer? What is the approximate lifetime value of a small business customer?
• We will start with the assumption that Butterfly starts off with 4000 users and that these users are divided into 2500 small business users and 1500 individual users. This assumption is based on Karen’s research that few individuals currently use social media monitoring for personal use, and that this segment will initially be smaller than sales to small businesses. Therefore with a rate of $25.99 per month, the lifetime value for an individual customer over a five year span is $554.33 (Exhibit 1) and $519.00 (Exhibit 2) for small businesses. These figures take into account that the $20,000 per month for base expenses will be divided up amongst new customers, therefore this price is reduced at an annual rate equal to the annual churn rate.
How should Karen develop an IMC campaign for Butterfly’s introduction?
• To encourage individuals and small business owners/managers to use and connect to the benefits that Butterfly offers, Karen should offer a one week free demo to prospective customers. As an introductory special, when the customer chooses to sign up for the 12 month contract they would get one month free. So, for a one year subscription they would pay for…