TheFilter Case Study
TheFilter Case Study
TheFilter Company, which intends to specialize in the development ofrecommendation filters, is facing four major issues. First, thecompany intends to develop a special engine that will address theneeds of its clients. Secondly, the Filter has very low profitabilityto sustain its growth in a foreseeable future. Third, the Filter isfacing the challenge of identifying the correct market segment fromindividual consumers, companies in the entertainment industry, andnon-entertainment industries. Fourth, the company is facing achallenge in identifying the best way to convince potential customerabout the suitability of its recommendation engine. This paper willfocus on five major aspects of the case study, including the decisionfacing the Filter, important factors to understand the decisionsituation, available alternatives, recommend the best decisions, andappropriate ways to implement the recommended decisions.
Themajor decision facing the Filter is the selection of the mostpromising market segment. At present, the Filter’s ultimate goal isto market its service to companies that operate in other industriesother than entertainment, media, and technology. This implies thatall other decisions are based on the primary issue of identifying themost profitable market segment that the Filter should focus on in thefuture.
Keyfactors in understanding the main decision
Duringits initial operations, the Filter targeted individual customers whowould use the recommendation engine to make the purchasing decisions.A decision by the Filter to shift from individual customers and tofocus on business-to-business environment was based on the fact thatits initial market segment (individual consumers) was not profitableenough. This implies that the introduction of the recommendationengine provided by the Filter to the media companies was an attemptto identify a market segment that would increase the companyprofitability. All other decisions and challenges (such as provingthe effectiveness and superiority of Filter’s services) are effortsto find a reliable market segment that the company can focus on.However, it is evident that the Filter has resolved to focus on thebusiness-to-business environment as opposed to individual consumers.This is because Filter’s long-term strategy is to do business withestablished firms in media, entertainment, technology, and otherfirms operating outside these industries. These factors improve theunderstanding of the Filter’s decision situation to market itsservices to the most profitable market segment, but within thebusiness-to-business environment.
TheFilter has three major alternatives to help in the accomplishment ofthe long-term strategy, which involves an increase in profitabilityand focus on business-to-business environment. First, the Filter cantarget all the three categories of market segment, includingindividual consumers, media firms, and firms operating in industriesother than media, technology, and entertainment. This alternative canhelp the Filter in increasing its profitability by getting a portionfrom each market segment. Secondly, the Filter can focus on the mostprofitable market segments within the business-to-businessenvironment and conduct extensive marketing campaigns to increase thepopularity of its services. The marketing strategies should aim atinforming potential customers (including firms in the media,technology, entertainment, and companies in other industries) aboutthe special features of the recommendation algorithm develop by theFilter. Third, the Filter can diversify its services and improve itsalgorithm to cover a wider range of items, including web pages, news,videos, books, television programs, and music among others. This canincrease the popularity of the Filter to both individual consumersand firms, thus increasing its profitability. Although these are themajor alternatives available for the Filter, the firm can deriveideas from more than one alternative to make viable investmentdecisions as considered below.
Basedon three alternatives available, the Filter can make decisions tohelp the management in achieving the corporate strategy. First, theFilter should market its services extensively in order to ensure thatthe target consumers in the business-to-business environment areaware of the special features of the Filter recommendation algorithm.Giving free trials to potential consumers (established firms) is oneof the most effective marketing strategies for digital services.According to Lane (2011) effective free trial marketing should bemade risk free and simple. Some of the benefits of free trail includethe provision of a chance for potential consumers to compare theproduct with those of competitors and create an impression that theproduct or service can be trusted (Soleran, LLC, 2010). This willhelp the Filter to penetrate the business-to-business environmentwith ease. Secondly, the Filter management can decide to diversifyits products by recommending other items, including web pages, news,videos, books, television programs, and music. However, the firmshould identify the needs of the target market by conducting researchbefore committing resources (Linton, 2014). Some of the benefits thatthe Filter should expect from service diversification include asecure survival, increased profitability, and rapid growth (Clawson,2011).
Thedecision to market the services can be implemented by approaching thetarget firms and them an offer to use the engine free of charge for agiven period. This can induce them to make the purchase once theyrealize the benefits of using the engine developed by the Filtercompared to its competitors.
Inconclusion, the major concern for the Filter Company is theidentification of the most profitable market segment that will ensureits profitability in the long-run. The key alternatives available toaccomplish the long-term strategy include the focus an all availablemarket segment, extensive market within business-to-businessenvironment, and service diversification. The Filter can decide tomarket its services by giving free trials and diversifying itsservices. These decisions will increase the popularity of theservices offered by the Filter and profitability in the long-run.
Clawson,T. (2011). Thebenefits of diversification.London: Santander UK PLC.
Lane,A. (2011). Thepower of free trial.Robbinsville, NJ: Marketing Scoop.
Linton,I. (2014). Productdiversification strategy.Santa Monica: Demand Media.
Soleran,LLC (2010). Freetrail as a marketing strategy.Overland Park, KS: Soleran, LLC.