To: John Sustersic
From: Gursharndeep Singh
Subject: Datavast Inc.
Date: February 21, 2018
Owner of Datavast Inc., Winston Hao, has his business in loss and seeks ways to profit from the company. Datavast Inc. sells security clouds to all kinds of companies in China, a country which is unfamiliar with the new system, which led to not enough sales. One of the issues he faces is that his target market needs to be familiarized with the concept of security clouds. He wants to segment into either small companies or big companies but has a bigger advantage if he invests with larger companies.
Datavast Inc. provides security boxes in China, and some of the products/merchandise includes CDs, external hard drives (portable), USB storage, cloud (public and private clouds). In the years of running his business at a loss, he realized that there were fewer to none companies that were familiar with the pros and cons of his product, in a lack of skills to inform about his product. He has the smaller establishments (small-to-medium enterprise: SME) to offer to, and in the other hand he has the larger companies to propose the merchandise.
The company’s concerns were to either concentrate on SMEs or large-companies. His first theory was that SMEs could offer the fastest development in terms of both segments, but the issue was that these minor businesses would care more about the value of the product. The SMEs continually seek for a product or merchandise that could benefit their company but similarly have a cheap price. The other target segment is large companies. Large-companies did not purchase the products continually which permitted a much higher selling contribution in terms of sales/per unit. The larger industries also always stick to one provider and want the same result from previous purchases. Datavast was not rising in the large industrial market because businesses in China feared data leakage by exposing their data, which led to businesses not trusting the cloud system with storing their company information.
Production Cost: 7,000 RMB/unit
IT margin: 3,500
Production cost: 70,000
Datavast margin (75%): 210,000
Datavast sells their product to SI for 280,000 = SI margin: 120,000
The company needs to do some enquiry and come up with more than 15 large businesses that could benefit the most from the products and merchandise that they provide, knowing small businesses have more cons than pros to pursue. He should plan meetings with the companies on his list to set up schedules to speak to the CEOs and decision makers in that company and use some employees to use word of mouth strategy. Knowing the needs of bigger businesses, the company can research how to get the proper merchandise to the company that needs the product. He can them compete with other contendors, looking to promote company merchandise and trying to brand the name of the business to other clients.
In the beginning of this business venture, I highly recommend Hao to start selling to large companies by himself at first, to cut down on employee costs. Then, after he has established a consumer following or investing businesses, he may hire employees to support his company.