Market Analysis Summary
Within the last three years there has been a proliferation of broadband Internet connections. With so many people enjoying fast connections at work, they are no longer willing to deal with a dial-up connection at home. With the advent of Wi-fi technology, customers can now enjoy a fast connection without having to lay expensive cables since the signal is sent via radio waves. The targeted market segments are: students, professionals, techies.
4.1 Market Segmentation
The market can be segmented into three distinct groups:
- Students: these are people currently in academia and are accustomed to fast connections and are willing to pay for it. This group uses the Internet the most, whether they are trading MP3s or downloading videos.
- Professionals: this group conducts a fair amount of business over the Internet, whether banking, e-commerce, or communications.
- Techies: this group embraces technology as they enjoy challenging themselves with technology and the complexity it brings.
Other than the students, Grassroots' customers are fairly affluent (household income of >$50,000) and spend their money on technology offerings, whether it is digital cable, cellular service, or broadband Internet connections. The target customers are also generally well educated with 65% having a college degree and 20% having a graduate degree. Combining several demographic factors, Grassroots arrives at the following primary customer profile:
- Spends 10 hours a week on the Internet away from home.
- Has purchased something from a website at least once within the last two months.
- Educated with at least some course work for an undergraduate degree.
- Household income of at least $50,000.
4.2 Target Market Segment Strategy
Grassroots has chosen the three aforementioned target markets due to their adoption of broadband Internet technology. It is these three groups that are most likely to use a fast connection and the most willing to pay a premium for the connection.
4.3 Service Business Analysis
There are three main participants within the consumer broadband Internet market.
- DSL (digital subscriber line). A connection that utilizes the copper phone lines as the method of transmission.
- Cable. A connection that uses cable TV wiring for transmission.
- Satellite connections. These use satellites, in orbit to provide "cable" TV as well as Internet connections to residential and remote consumers.
4.3.1 Competition and Buying Patterns
As mentioned in the previous section, DSL, cable, and satellite access are the competitors in the broadband market. Consumer buying patterns are based on two factors:
- Availability: not every type of broadband connection is available to every consumer. Consumers often pick service providers based on what is available to them.
- Convenience: this is often based on where the outlet cords are based in the house, whether the computer will be located closer to the cable TV or nearer to a phone jack.