jSpan Corporation
Marketing Strategy
jSpan Corporation’s marketing program will position the company as an ASP to mobile workers. The service will be marketed to independent professionals and businesses that wish to outsource remote access. At a later stage, the addition of premium subscriptions and value added services will shift the jSpan Webtop from a remote access portal to a core productivity tool. The Webtop will replace the desktop as the users’ primary workspace. The jSpan Webtop will be customized and promoted to specific vertical market industry segments.
4.1 Strategic Market Entry
jSpan will launch its service through ISPs that provide broadband services to small and medium businesses. This market entry strategy establishes jSpan in the market while providing manageable growth. It also facilitates direct interaction with the customer base to further refine the service. jSpan will co-market with ISP partners as well as marketing directly to end users. Availability of the service depends on the combined reach of partner ISPs.
jSpan will also seek partnerships with medium sized broadband wholesalers – Covad Communications Group, Inc., Northpoint Communications Inc., Rhythms NetConnections Inc., and Softnet Systems Inc. These partnerships will rapidly expand jSpan’s regional coverage and accelerate the acquisition of ISP customers.
4.2 Sales Forecast
The jSpan sales forecast is based on the acquisition of individual users. Revenue is assumed to be a constant $21.25 throughout the sales forecast period. The number of jSpan users shown for each year is the number of user subscriptions at the end of that year ignoring the effect of customer churn. The revenue forecast accounts for users that were acquired mid-way through the year. The jSpan fiscal year begins on October 1st. Market size estimates were interpolated to the jSpan fiscal year from a calendar year forecast. jSpan anticipates the unit price for basic connectivity services to eventually decline to between $10 and $15 per month. To provide a conservative estimate, the potential market size was calculated using a flat-rate basic subscription fee of $10.00 per user per month.
4.3 Pricing Strategy
The per user cost for jSpan service takes into account other remote access options and the price individuals are willing to pay for value added services. On average, Internet user households spend more than other households on communications and communications services. Internet user households spend an average of $101 per month on telephone services, exceeding the national average by $30 (not including long distance charges).
The projected end user price of $25 per month averages basic service accounts and additional fees for premium subscriptions and value added services. As the service gains customer acceptance, eventually prices will erode. However, the specialization of the Webtop into vertical market segments, the addition of value added services and premium subscriptions, all serve to maintain the projected average of $25 per user per month. Revenue sharing with jSpan partners will be treated as a 3% to 15% price discount, reducing jSpan’s revenue to $21.25 per user per month.
20 State of the Net, The New Frontier, McGraw-Hill, 1998.
4.4 Customer Acquisition and Advertising
The end user of the jSpan service is an independent professional or business that has broadband Internet access. By sharing revenue with the service provider, jSpan creates an incentive for the service provider to bundle the jSpan service into a complete service package. CLECs and ILECs are efficient links to broadband ISPs and are seeking partnerships with ASPs. As wholesalers, they are well positioned to make the jSpan service available through their ISP customer base.
jSpan will co-market the service with service provider partners as well as market directly to potential users. Service providers can be reached directly through trade magazines (e.g. Boardwatch, CIO and Industry Standard), trade shows (e.g. ISPCON and COMDEX) and online content aggregators targeted at ISPs (e.g. ISP Network and internet.com’s ISP Resources Channel). In addition to co-branding in advertisements, co-marketing may include bundling jSpan service with other ISP service options or offering free trial periods when broadband service is initiated.
End user marketing is designed around a co-marketing strategy with service providers. In jSpan advertisements, it may be necessary to refer to service providers that offer the jSpan service, creating an incentive for ISP participation. jSpan will build marketing relationships with product manufacturers who are targeting a similar customer base. Potential marketing partners are the manufacturers of cellular telephones, PDAs, and other devices widely used by mobile professionals. jSpan service increases the functionality of any device that supports a compatible web browser.
Advertising will utilize electronic and print media directed at telecommuters and mobile workers. IDC estimates that 74% of PC owning telecommuters have Internet access. jSpan will establish an Internet presence through vertically oriented Internet content providers. Advertisements will be placed in magazines and newspapers read by remote and mobile professionals.
4.5 Competitive Comparison
There are three competitive threats to jSpan: Web based applications, other remote connectivity solutions, and Application Service Providers (ASP).
An increasing number of applications are migrating to the Internet and may be viewed as competitors to jSpan. However, jSpan facilitates the transition to online service providers by aggregating online and remote applications into one work environment. As a result, many providers are potential jSpan partners. Entirely virtual desktops force a user to adopt all new applications and new work methodologies and do not provide the ability to access customized applications.
Direct-dial remote access solutions have been on the market for some time. However, these solutions are often complex to install and only provide remote access from one pre-configured computer to another. While some of these solutions have been upgraded to support connectivity over Internet infrastructure, the companies providing the software are sustaining a product oriented business model. Integration into the service provider model poses a significant threat to their existing revenue stream.
Companies are increasingly relying on ASPs to provide high end IT applications. ASPs generally offer a single enterprise application or a suite of integrated applications to a broad base of medium sized companies. ASPs could potentially adopt services similar to jSpan and utilize their existing customer base to rapidly acquire market share. However, currently ASPs are targeting large organizations with significant resources rather than the Independent professionals and small to medium businesses targeted by jSpan. ISPs are better positioned than ASPs to reach the jSpan customer base and are willing to outsource their value added services from jSpan.
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