Business Scenario: Market Expansion

Note: These case studies are intended to serve as an illustration of business concepts. Any reference to actual companies is unintended.

Introduction:

"SMS Provider", a technology start-up providing services to telecoms companies developed a product aimed at providing enterprises with the ability to broadcast messages to their employees via SMS (short message service).

The was postioned as a low-cost and efficient alternative to issuing paper memos which would be circulated to various departments, sometimes taking up to three days to circulate to all staff members.

Instead, the human resource department would have access to a PC-based command console which will enable them to queue messages for broadcast too employees message pagers or cell phones. All employees would be notified within a period of three hours.

Although a few forwarding-taking enterprises adopted the solution, others chose to pass on it. Among the chief objections were that as it was a metered service, ie there would be a charge attached to each message sent out, it was considered 'expensive' and would substantially increase costs.

Hence, a combination of:

• an adoption rate that was substantially below expectations
• steep product development costs 
• high operating costs

were threatening the company's commercial viability. Unless there was a substantial change in it's business strategy, the company might have to consider the prospects of downsizing.

Analysis:

As there was stiff resistance from corporates, efforts were made to consider other markets.

A team was formed to look at the viability of the consumer market.

However, a chief concern was if there was interest to broadcasting messages to large numbers of people and more importantly who would bear the cost of broadcasting the messages.

After conducting research and user feedback, the project team proposed a solution.

Among their chief requirements:

• high levels of disposable income
• sufficient critical mass to be broadcast to
• In tune with technology trends and early adopters of cell phone technology

Implementation:

Their finding was that teenagers would be a possible market.

If the broadcast costs could be contained, they could prove to be a viable market.

Hence, the concept of "SMS Chatrooms" was developed and launched.

Via this model, participants could enter a "virtual chatroom" and interact with groups of people.

These rooms could be categorized by themes, common interests, hobbies or other subjects.

Each "room" contained a grouping of people and a user could send a SMS to a designated number.

Their message would then be broadcast to the entire group. The user would then be charge according to the number of people receiving the message. Sending a message to a room containing 20 people, would count as having sent 20 messages.

In this manner, the company was able to help the telco substantially increased revenues from SMS services and increase their 'metered service' fees to the client.

Next page