...Founders of HubSpot, Brian Halligan and Dharmesh Shah saw an opportunity to develop software products to assist companies execute inbound marketing as the increase of popularity in online blogging, social media, platforms and search engine optimization (SEO). The strategy used by their company in Inbound Marketing is that it "pulls" interested customers by making available relevant information and disseminating data based on customer search processes. Instead of going and hunting for customers, interrupting their everyday lives through telemarketers and direct selling, Hubspot realized the simple efficiency of being there for the customer to find the company or product they are seeking. This effectiveness revolutionized the traditional marketing strategies used by other companies and other competitors. Hubspot differentiated its customers based on two types. Small Business Owner customer also known “Owner Ollie” and Marketing professional customer called “Marketer Mary”. Owner Ollie made up 73% of customer portfolio. Marketer Mary made up about 27%. Owner Ollie customers are the businesses ranging in between 1 to 25 employees. For these owners, their primary objective was to create maximum leads for their businesses. Owner Ollies are busy with all the functions of the organization and rarely have a defined marketing department. Owner Ollie customers less knowledgeable of the Web 2.0 technology and have great use for the training and guidance that comes along with the Hubspot software...
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...NAME ------------------------------------------------- Marketing 741 SECTION 8am/9:30am/11am/2pm Target Market Selection Should HubSpot cast a wide net or narrow their focus? Effectively argue that HubSpot should narrow their focus using frameworks we have discussed, as well as points from the case. The company is now facing with customers with diverse needs and preferences. In fact there are customers with different preferences and also competitors that provide services to different segments. These segments can be categorized as small companies, large companies, business to business and business to customers. The services that must be offered to each of these segments should be different considering their different needs. For example, the price should also be different to comply with the offered services and the degree of required interaction between the company and its customers. The channel of approaching could also be different. For example, Should HubSpot target B2B or B2C customers? -Use a mix of qualitative (strategic) and quantitative (CLV, market potential) facts to argue your point. Do not restate points from the case, but use them to support your decision. -Will this group be receptive to the product? I.e., is HubSpot providing value to these segments? Is there competition in this market? Is HubSpot well positioned to serve these customers? Are there any other outside forces we should consider? Based on the facts that presented in the case the company...
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...Should HubSpot cast a wide net or narrow their focus? Effectively argue that HubSpot should narrow their focus using frameworks we have discussed, as well as points from the case. HubSpot is still a young firm that is trying to satisfy the needs of a very large market. This can prove rather difficult. If they chose to focus on a narrow segment/industry, the engineers can work to build the product for that specific industry. Once the product is in good shape to satisfy the needs of that industry, they can venture out into other industries as well. It also makes it easy for HubSpot to standardize its processes across all customers. The narrow focus also eliminates some of the pricing challenges that come with targeting clients from multiple industries and segments. Should HubSpot target B2B or B2C customers? -Use a mix of qualitative (strategic) and quantitative (CLV, market potential) facts to argue your point. Do not restate points from the case, but use them to support your decision. -Will this group be receptive to the product? I.e., is HubSpot providing value to these segments? Is there competition in this market? Is HubSpot well positioned to serve these customers? Are there any other outside forces we should consider? HubSpot could target the B2B segment for a couple of reasons. Firstly, customers within this segment generate a lifetime value of $7368.4 for HubSpot, over two times that of a B2C customer. Secondly, most B2B companies have higher budget allocations...
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...Overview Hubspot provides an inbound marketing content management system (CMS) to help businesses get found on the Internet and convert leads into customers for maximum ROI. Have a successful track record for a startup. Hubspot has new reached crucial stage, where in order to accelerate the growth rate and to increase their profit, Hotspot need to decide the following: (1) target segment of their customers, (2) how to channel their product development resource, (3) reduce the churn rate with a new pricing strategy and (4) determine to use inbound marketing or outbound marketing or mix of both. Hubspot Analysis: Hubspot has a unique software tool that enabled its customers to market their products and services like Search Engine Optimization (SEO), Social Media, Blogs, Podcasts and social networking websites like Twitter, Facebook. Hubspot became popular for its inbound marketing strategies that pulled prospective customers toward a business. The software tools that it offered were also created also based on the same principle of inbound marketing. Hubspot provides three type of services: (1) content design, (2) Exposure optimization and (3) Lead tracking and Intelligence. In the Content design, Hubspot offer predesigned templates to companies build their own website. Exposure optimization consist of Search Engine Optimization (SEO) tools and Link grader, which helps customer website identifiable via search engines. Lead tracking which offers marketing intelligence analytics...
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...1. Do you agree with HubSpot that the "rules of marketing" have changed? If so, how? Is inbound marketing the answer? Why or why not? Yes, I agree with HubSpot because with the use of the Internet to communicate information (i.e. marketing campaigns) being the norm now, people are able to verify the information and can look for competitors while on a cold call. Additionally, life has gotten a lot busier and when people are interrupted during a task by a marketer, they will most likely not buy from them. Cold calling and traditional advertising related to outbound marketing tried to catch people off guard and convince them to buy a product or service right at that moment. It was effective before the Internet and smartphones flourished because people did not have the luxury of searching for alternatives products and services at their fingertips at any time. Frequently, people agreed to an offer over the phone because it sounded reasonable. Now, with so many alternatives to a given product and easy accessibility to the market, people will buy a product if they can connect to it in some sort of way and find it online. If you have online marketing content that speaks to people – as is the goal with inbound marketing techniques such as blogging - then you will attract the right type of customer. The limit with inbound marketing is that only the people who can relate to your content will buy it. It is impossible to relate to everyone, yet even the segments of people that buy a certain...
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...Challenge: Hubspot emphasizes that it will do only INBOUND marketing. That is the real problem and hence Hubspot’s real problem is the business strategy and not the marketing strategy. Inbound marketing cannot be a stand-alone strategy for a company but since Hubspot champions it, it has in effect cornered itself. Problem with Inbound is , it is a “carpet-bombing” air-war scheme which works in limited mode but in reality market demands “more targeted” ground-war scheme to break through the clutter. This means delivering high quality content to “right” audience and not just to everyone. You also have to do it across multiple channels, which may smell of some “outbound” marketing strategies like phone, direct mail etc. The challenge here is if someone don’t know about you then they cant search about you. And hence lack of an integrated multi channel business model is at the root of Hubspot’s problem. Hubspot is confusing inbound marketing with “content-driven” inbound marketing, which seems to create trouble for it. Hubspot SWOT Analysis: Strengths • Simple solution which attracts customers initially • Good lead tracking and analytics offering • Customer acquisition cost is comparatively lower than competition • Pioneer of Digital Inbound marketing • Do a good job of creating traffic • Decent demand for Hubspot’s freeware programs in market • Passionate employees • Good online buzz and positive press Weaknesses • Dependency on content marketing component of...
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...HubSpot Case By December 2008, Hubspot was a highly growing start-up in the inbound marketing sector; it had a very competitive product and ~1,000 customers. The goal of Halligan and Shah, founders of HubSpot, was both to accelerate the Hubspot’s growth rate and increase its overall profitability in the following months. However, in order to do so, the company faced various issues that needed to be addressed. 1.Develop clear customer segmentation. HubSpot did not segment the market based on real customer needs, it “divided” the market using mainly demographic variables (# employees) and customer profile into Owner Ollies and Marketing Marys. 2.Target specific most promising/high-value customer segments considering attractiveness and company strengths. HubSpot did not target a specific type of customer; instead it was investing its resources in capturing customers of the two profiles determined, not considering which customers were more valuable for the company (CLV). 3.Develop a customized value proposition for the selected segments that accelerates growth and maximizes CLV. Hubspot started to differentiate Owner Ollies and Marketing Mary’s value proposition through price and features (4Ps) however more customization was required. After thorough analysis if the company’s current situation (3C’s), possible for customer segmentations, targeting and positioning strategies and assessment of CLV, I believe HubSpot has an opportunity to both accelerate its growth rate...
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...since this customer does not think about marketing most of the time and typically doesn’t shop around and try to find any other competitive, I think Hubspot can increase its initial and monthly payment slightly that would improve Hubspot's profitability. 2) For MM – this customer is larger in size compared to OO and has more purchasing power. Exhibit 7 shows it can potentially charge higher price premiums. Since Customer lifetime is higher for MM than OO, Hubspot can make profit from MM for a longer period of time. MM is more stable businesses and 67% of MM are B2B which is showed in Exhibit 5. Since inbound marketing is more effective for B2B compared to B2C, I think Hubspot should focus more on MM to increase its profit. For both case, I think Hubspot should study their price sensitivity before increasing its prices. To do so, one way may be to analyze changes in post purchase customer retention and new customer acquisition data resulting from variations in price. In my opinion, Hubspot should mix inbound marketing and outbound marketing. Even though, the acquisition cost through outbound is 5-7 times larger than that through inbound, OM will generate more customers. The cost for advertising in mass media like TV or magazine will be very expensive. But, if Hubspot takes internet ads on the popular website that will cost cheaper. Hubspot can find the website that many potential customers visit by using its own software. Hubspot can think about going for joint venture...
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...JILL AVERY NASEEM DAHOD HubSpot: Inbound Marketing and Web 2.0 None of [the old rules of marketing] are true anymore. The Web has transformed the rules, and you must transform your marketing to make the most of the Web-enabled marketplace of ideas. — David Meerman Scott, author of The New Rules of Marketing and PR Business was good at HubSpot. Founders Brian Halligan and Dharmesh Shah were thrilled with the progress their young company had made in the two years since they began their journey to convince corporate America that the rules of marketing had changed. To be successful in the marketplace, HubSpot needed to be much more than just a software company. Its founders had to become evangelists, preaching a new way of doing business that would fundamentally change how marketers reached their customers. To their great pleasure, Halligan and Shah were finding a willing audience for their ideas. HubSpot was now considered a thought leader in the Web 2.0 space, coining the term “inbound marketing” to describe marketing strategies and practices that pulled prospective customers toward a business and its products, through the use of Web 2.0 tools and applications like blogging, search engine optimization, and social media. Halligan and Shah realized that their business was at a crucial juncture. They had just reached the noteworthy milestone of 1,000 customers, attaining this level of critical mass by practicing what they preached. HubSpot had built its business by...
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...moving, ever transforming world the only thing permanent is 'change'. With the onset of technology the rules of marketing have obviously changed, purpose of marketing remaining the same though. The masses are growing smarter and it takes a lot more to trigger an interest from their end. With the onslaught of increased number of communication mediums, people's lives have been infiltrated more than ever before. Apart from the mass media, there are several ways of interacting with potential customers. And here is where the problem arises. People feel that their privacy is being regularly compromised when they see that they are interrupted and bothered with advertisements which they are not even interested in. Traditional marketing rules proactively tries to engage a person without his/her consent. Not that this is a bad thing, because this system has been working for decades now and shall continue to do so in the near future. Difference being that since the number of communication mediums have increased, the frequency of engagement of people has increased drastically. That could work negatively. Specific to the Hubspot case; the crux of the Hubspot company was to capitalize on the positives of inbound marketing strategies and prove that the traditional outbound marketing approach was in for a change, completely. The difference in plan of approach was that Hubspot as a company did not advertise their offerings directly to all target audience. They created tools and content that...
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...I would suggest that HubSpot target only to Owner Ollie’s with a heavy focus on B2B. Back to the time when the case was written, HubSpot had 1,000 diverse customers, including small business owners, marketing managers of large firms in the health care, real estate, and construction industries. The inbound marketing did not target a specific type of customer and ignore 50% of the leads. Since each segment had its own needs and service requirements, gaining economics of scale was difficult, so were the implementation of strategic planning and pricing. Single-Segment Concentration would allow for the company to maximize its efficiencies as it would only need to support one type of customers. The rational to choose Owner Ollie over Marketer Mary is as follows: * Owner Ollie presented 73% of Hbspot’s customer base and was much easier to sell products to than Marketer Mary. Even though, Owner Ollies required less up-front costs $1,000 compared to $5,000 and lower monthly customer fee $250 versus $500, the much larger sales volume and shorter selling cycle of Owner Ollie could compromise the lower costs HubSpot charged to individual Owner Ollie customers. An up-front price increase is easier to be done, because Owner Ollie customers were not likely to shop competitors pricing and would be able to absorb a price increase. * Although, Owner Ollies presented a higher churn rate than Marketer Mary, they displayed higher possibilities of relying on HubSpot’s content management...
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...HubSpot: Inbound Marketing and Web 2.0 By Ashna Bali 1) According to HubSpot, the rules of marketing have changed in the sense of the way that businesses approach or reach out to their customers. HubSpot believes in tapping into technology and Internet for marketing businesses and products by using Web 2.0 tools and methods such as blogging software, social media and search engine optimization. The CEO of HubSpot, Brian Halligan, believes that the traditional “outward” methods of marketing are seen by potential customers as an interruption in their lives (For example, advertisements on TV while watching your favorite show) and society is getting better at blocking out such interruptions. Therefore, the impact of such marketing is obviously reducing. On the other hand, “inbound marketing” is on the rise. Google has become such an important part of our lives today and people like to read blogs and reviews online before purchasing products or services. Hence, businesses should direct their attention to social media, blogging and search engine optimization. David Meerman Scott (2010) recommends that marketers "earn their way in" (via publishing helpful information on a blog etc.) in contrast to outbound marketing where they "buy, beg, or bug their way in" (via paid advertisements, issuing press releases, or paying commissioned sales people, respectively). Yes, I agree that the rules of marketing have changed and that these days the internet and social media plays a very important...
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...HubSpot: Inbound Marketing and Web 2.0 Contents Introduction 3 HubSpot Background 4 Inbound vs. Outbound Marketing 4 Product & Pricing 6 Marketplace & Competition 10 Marketing Strategies 14 Customers & Segmentation 16 SWOT Analysis 22 CRM Implications 23 Problem Statement 25 Appendix A – Exhibits 27 References 30 Introduction HubSpot founders, Brian Halligan and Dharmesh Shah, were selling more than software—they were selling a philosophy. They believed that Web 2.0 was a game changing technology that could be leveraged to fundamentally change the way marketers attracted customers. At the same time, typical push marketing techniques were becoming ineffective. Greg Stuart, x-CEO of Interactive advertising bureau, estimates that advertisers spend roughly $112 billion (just over half of total spending in 2006) on sending messages that reach the wrong audience or none at all (Anonymous, 2006). HubSpot designed their products to fill and manage the customer funnel using techniques termed Inbound Marketing. Using the same techniques and products they were selling, HubSpot was able to attract 1,000 customers in a little over a year which showed that their philosophy was sound. In fact, their philosophy was “sold” even before they had a single customer because they were able to raise $17M in venture capital. They attracted a diverse group of customers using the inherent characteristics of inbound marketing techniques. However...
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...sophisticated | Fairly easy to sell to | Time consuming | Scarce time and resources | Special marketing team at customer’s office | Wanted to increase the top funnel number of their business | Focus more on the bottom line | Normal CLV : Given the drop out/ churn rate of Owner Ollie and Marketer Mary , the lifetime value of Owner Ollie is less than the lifetime value of Marketer Mary. Assuming that Hubspot has the potential to acquire the complete market , we can see from Exhibit 1 attached that the number of Owner Ollie customer is 5 times that number of marketing Mary customer. Hence the net potential revenue that can be generated from owner Ollie is greater than that of marketing Mary. Hence Hubspot should focus on Owner Ollie in Long term If the Hubspot is able to convert the market into CMS At the present rate given in the case where 13% of Owner Ollie customer can be converted to CMS model and 2 % of the Market Mary convert to CMS model with $500 of additional fee the churn rate drops significantly As can be seen in exhibit 2 , that even though the number of customer in the Owner Ollie segment is large the net revenue generated from Marketer mary is large . So Hubspot should try to get the customers on the CMS model and pursue Marketer Mary customer as they can generate more revenue. Pricing Model Software as Service (Saas) – Renewal Model: Currently Hubspot charges $500 as consulting fee for both its customer charging 250/month to Owner Ollie and 500/month...
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...(Question 1) The rules of marketing have change as we are now witnessing a shift from a push strategy to reach prospective customers to a pull world of commercial messaging. Traditionally, marketers in a B2C market used communication channels such as mass media with advertising campaigns to attract awareness and buying intentions from potential customers. In a B2B market, sales representatives were obligated to devote themselves in tasks such as telemarketing and direct marketing in order to identify leads. However, with the arrival of many useful web 2.0 tools, the declining popularity of traditional media, the easy access to information, and hence the change of habits in the consumers’ buying process, conventional marketing in both B2C and B2B markets aren’t sufficient anymore. Outbound marketing is out of date; inbound marketing is the new solution to the market trend. In the current environment, outbound marketing’s effectiveness is diminishing while inbound marketing strategies with search engines, blogs and social media are generating new business at higher rates. The phenomenon is logical because the outbound marketing tend to awaken a need, while the inbound marketing serves as a way to answer that need. In other terms, inbound marketing is centric into the prospective consumer’s buying process thus increasing the likelihood of purchasing. Also inbound marketing is very cost-effective. (Question 2). HubSpot has taken advantage of this market trend to impose its corporate...
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