Winston Hao, the owner of Datavast Inc., is operating at a loss and needs to find out a way to be profitable this year. Datavast Inc. sells Data Security Boxes to big and small companies in China who are new to the concept of cloud storage. Winston Hao needs to dial in his target market, but the real issue is not enough sales. Hao is certain to segment to try to emphasis deep in order for him to build up his company. One of the issues that affect Datavast would be that either the market is behind in data storage or none at all. It’s also in lack of protection to face bankruptcy. Hao wants to target either small companies or larger companies, but would advise to market to larger companies to engage bigger advantages. If the Datavast goes to larger companies they will provide better effect for any pros and cons. It would be for greater good to act on his market to larger companies to try and provide the Data Security Box.
The company of Datavast was a provider for computing storage products in China. Some of the products that Hao provides are CDs, Portable External Hard Drive, USB Flash Drive, Cloud Storage (Public Cloud, and Private Cloud). In the first five years of opening his business he was suffering from a great loss. Many of the obstacles he faced were due to companies not knowing about his products. Hao lacked to inform about the skills his product offered. Although Hao has many products to provide, he has trouble trying to figure out whom is he going to target. In one hand he has the smaller companies (small-to-medium enterprise: SME) to provide too, and in the other hand he has the larger companies to offer the products.
At the beginning Hao’s assumption was to focus on SMEs or large-companies. Hao’s first assumption was that SMEs would provide the fastest growth segment, but the problem was that the smaller companies would care more about the price that was given to the product. The SMEs were always looking for a specific product or solution that would benefit the company and at the same time have an inexpensive price. The other target Hao is looking into is Large-companies. Large-companies would not buy Hao’s products constantly and allowed much higher unit contributions.The larger businesses would always stick to the same supplier and want the same solution. Another reason Datavast wasn’t growing was because not many companies new about the many products Hao provided. Because of China businesses feared data leakage, bankruptcy and exposing their data, companies didn’t trust anyone with storing their company information with providers.
Data Analysis and Alternatives Analysis
Winston Hao is the founder of the company Datavast Inc. Hao had several decisions to make for his business. Even though, Hao had already made numerous adjustments to his original product, he still didn’t know to whom he was going to distribute his new product. His main targets were small-to-medium enterprise or larger companies. Five years ago Hao worked hard in building his company and designing the cloud storage product. The purpose was to offer their services not only to North America but also moving into China. Datavast partnered with China Telecom hoping it would give them credibility. Datavast needs to decide if it would be a good idea to sell to small-to-medium enterprise (SME’s), but the companies knows that if they sell to SME’s they will be facing several challenges. For example most of SME’s companies look for a low price product that would do good enough to hold their data. Smaller companies can easily look into buying from the IT Suppliers, and if Datavast looking to seeling to SME’s the prices would have to go down in order for the company to stay in the market of competitors.
SME’s do pay faster money since the product they buy is cheaper then they pay in two to three weeks. As good as it sounds for the Datavast to receive cash quick it wouldn’t be worth the chance since them cash they receive it’s not going to be enough. Larger companies are the other option Datavast Company would be looking into selling the Data Security Box. If we look at the Pros and Cons of larger companies they don’t have as many downsides. One of the disadvantages to sell to larger companies would be that they would receive profit after two to three months, not as fast as the SME’s, but is due to making decision process. Another issue that Hao would be facing would be that they would have to compete with SI’s which are the suppliers for larger companies. Most of SI’s are well known by larger companies and Datavast is not to recognizable to larger companies.
I believe that by reading this article Hao should first focus in selling to Larger Companies. Hao’s company wasn’t too big and they didn’t have a working capital loan. Therefore, the company has a better chance for Hao’s company to gain more revenues since the price for the product didn’t have to go down, it would be smart to cut the competitor instead of cutting price. Since he is not going to sell to smaller companies Hao doesn’t have to worry into selling to smaller companies. But Hao needs to know how to take the next step to gain the trust to those larger companies to sell the Data Security Box.
In most cases when opening a new business, the best option is to sell our products to smaller companies, “where we think we are safe”, but in Mr. Hao’s situation is most certain to receive better advantages if selling to larger companies. Winston Hao has both alternatives to choice from. In his right hand he has the larger companies, with longer buying cycle and more profit to receive and his left hand he has the small-to-medium enterprise, which has a shorter buying cycle, but short money and unsafe loyalty. In the end, the better alternative for Hao is focusing more on the Larger Companies.
Because Winston’s company cannot afford to burn through his finite resources, I’m recommending that he goes out and sales his product directly to the larger businesses himself. This way he can save on his margins by cutting out the middle-man (supplier) for the time being while he grows. Even Though Datavast is not going to make his money fast, but in the long-run it would help him learn more about the larger companies and maybe even partner up with the SI’s and will be able to gain that experience into better profits. Another reason I recommend he sale his product himself is because in a face to face situation, Winston can learn more about the business owners’ concerns and objections and then learn how to overcome each of them. One last thing I would recommend is to maybe do some research on other companies that sell the same product as Datavast, to beware of the price he will sell up for the product. It would also help him know what other strategies other companies are using to get there products to consumer hands.
First, Winston needs to research and come up with a list of at least 30 larger businesses that would benefit the most from his. Second, he should then make phone calls to everybody on his list to set up appointments to speak to the decision makers in that company and maybe use some of his workers that know about the product and to take them out to larger companies to advise how good Data Security Box. Third he should then go to all his appointments and use them as learning experiences to help him find the perfect hook/angle to sell his product better. Then after he has made several sales himself and some of his workers to give his company a little wiggling room he can then hire and train sales people to sale for him.
However, after knowing the needs of larger companies, Hao can figure out how to get the product to the company that needs the product. He can them compete with other SI’s companies looking to advertise his product and looking into trying to make the name of the company known to other consumers. But is all a matter of time. Selling the Data Security Box to larger companies with bring Datavast better result and advantages to grow in the market.