Prosper-Marketing Fit Participation A7 (1)
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1. What marketing challenges are Harrison and Than-Blonk facing? Prosper is a new company and as of now they have just been targeting anyone who will use their service/product. They are looking to meet with a private equity firm interested in a seed round investment but in order for this to be successful they need
a compelling narrative and a clear marketing plan. Currently they do not know who their ideal target market is or how to market to these segments. Also don't know what
pricing model to use for each of these segments and how this will affect things. 2. Identify a few objectives (decision criteria).
Increase their user base, increase revenues, work towards becoming a self-
sustaining consumer brand and maintain momentum to safeguard their success. 3.Perform a qualitative and quantitative analysis for each of the 3 options presented in the case; think of pros/cons for each alternative. Strategic Options
Pros
Cons
Institutions
-Enhanced brand credibility
-generate 30% repeat customers after leaving institutions
-currently accounts for 80% of revenues
-could add hundred of user at a time
-Caring buyers as they wish to improve key metrics
-more consistent and stable environment and revenues than B2C
-doesn’t align with brand goals of becoming a consumer brand -Lowest contribution margin of $350 (465-115) with the lowest CLV
-Cannibalization of other exciting student segments -loss in student segment equally results in a drop in revenues offsetting success
-major bargaining power: complex and
time consumer sales and negotiations
Families
- Second highest contribution margin of $400(535-
135) and second highest CLV of $535
-Increase current students from 60% to 70% of the customer base -Aligns with founders/brand goals of becoming a consumer brand
-major influence over students decision-making processes - total loss of institutional business which is currently 80% of revenues -Requires more effort and cost because it involves having to market the product twice
-Marketing twice requires using a mix of costly mediums like social media for
students and tv ads for parents Switchers
- Highest CM of $450 (665-15) -Highest CLV of $665
-Increase the share of this segment to 70% of Prospers customer base - strong ability to pay (opportunity for new pricing models that increase success) -Propser has strong capability to deliver the career transitions they -No need for social media which Prosper already lacks, they can use career-focused websites instead - reduces institutional customer base to 25% of the customer base which was currently contributing to 80% of revenues
-more expensive to acquire with an acquisition cost of $215 -dispersed population that can’t be targeted as effectively as students - uncertainty around if they are able or willing to pay more and how that would
impact success -People are starting careers later when they are sure to avoid switching so this segment may disappear
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