InvestorSoft Group – 2

Ashwarya Agnihotri

Nakul Jain

Nikita Sharma

Priyanaka Baxi

Saharsh Chordia

Sikha Aggarwal

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CASE SUMMARY

Investor soft , an Edmonton-based Software company that builds automated software Its service enabled companies to manage Investor relations section of a website Chris Bolivar, president of Investor Soft faced with mainly three challenges as he considered his

launch strategy Will he be able to convince publicly traded companies that they needed a service like

Investorsoft Did the company possess the necessary capabilities to market and sell the service Could he expect to gain the confidence of his TG, which emphasised on size and reputation

Decisions to be taken : Which segment to target What services and prices to offer What promotional strategies to use

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Micro Cap Companies (MCC) Small Cap Companies (SCC) Mid Cap Companies (MiCC)

Blue Chip Companies (BCC)

59% of companies listed in Canadian Stock Exchanges

Market Cap. - Less than $50 million

Usually lack an advanced investors relations programs (IRP) (CEO /senior officers doubled as Investor Relations Manager)

Potential to benefit from a serious investor relations effort

29% of Canada’s publicly traded companies were considered

Market Cap. - $50 million to $300 million

Conscious of the need to manage Investor relations

Devoted time and money to investor relation functions

Unwilling to spend heavily Priority – Convenience in

managing online company information

8% of firms in the Canadian market

Market Cap - $300 million to $1 billion

Capable of spending significant resources on high-quality investor relations

Credibility and reputation were important

7% of Canada’s publicly traded companies

Market Cap of over $1 billion

Public Image was paramount

Spare no expense in managing investor relations

Led by a team of professional specialists commonly operating with the support of Investor Relations Consultants

Q 1. What customers should Investor Soft pursue with its new service? Why?

Company Segmentation by Market Capitalization

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2500 firms in Canada & 6000 in US

Focus on home country (Canada) first

Toronto – Financial hub population of about 5 million, consisted of half of Canada’s publicly traded firms

Calgary – Comprises of 20% of market and closer to home, would save time and money

Target US after some significant market share in Canada

Distance between Edmonton & Calgary- 300km (approx.)

Distance between Edmonton & Toronto - 3500km (approx.)

No time difference between Edmonton & Calgary

2 hour time difference between Toronto & Edmonton

Target Calgary and next year target Toronto after acquiring customers (Oil & Gas) In Calgary

Company Segmentation by Geography

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• Efficient and professional way to manage investor relations section• Cost-effective, time-saving and technically superior to existing offerings (products

and services)• Enhancing companies’ stature among institutional brokers• In-house but lean software development team with capacity to enlarge staff on ad-

hoc basis (lesser cost)

Advantages

• Unknown brand• No testimony or certificate of qualityDisadvantages

Investor Soft Advantages & Disadvantages

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Micro Cap Companies (MCC)

TARGET SEGMENT

Reasons for Targeting Micro Cap Companies : 59% of listed companies in Canada fall under this category Brand Building : so that companies that rely on brand and reputation can be targeted later Level of risk associated with this segment is Low Facilitate an Increase in Volume Sales Establish a foothold in the market thereby increasing its share

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Q 2. Is Market Capitalisation the best way to segment the market? Is there a better way to segment the market? What other Macro or Micro segmentation base would you utilize to segment the market effectively?

InvestorSoft in the business of providing end to end Investor Relations Management softwareHence only publicly traded firms can be potential customer – As they have listed them on Stock Exchanges with a primary intention to get cash infusion, hence they need to attract retail as well as institutional investor As already seen firms in different market segment have different requirements – which lay out the necessity of this software for certain firms

Hence Market Capitalization is the best way to segment the market

Other Segmentation base (Macro & Micro Factors) 1. Geographic Distance2. Regulatory requirement by the Securities Regulators

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Q 3. What are the various factors that Bolivar should take into account while making a decision of segment?

Potential of market penetration

Opportunity to increase the brand reputation

Ease of reach to the market

Competitor’s activities

Costs and risks associated with the segment (Eg: Promotional costs)

Ease of dealing with the clients

Cost-benefit ratio

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Q 4.What the behaviour of the customer when it concerns handling the investor relations portions of their website? Are there any discernible patterns to the behaviour? What clues are there for Bolivar in

this behaviour?

Micro Chip

Characteristics• Few well known companies• Absence of an investor relations

manager• Less focus on branding

Clues• Easy convincing• Soft targets• Long term growth strategy

Small Cap

Characteristics• Unwilling to pay high

amounts• Need of managing their

relations effectively• Conveniene is high priority

Clues• No prescribed single method

of Marketing• Investor relations is a

relatively strong focus

Mid Cap

Characteristics• Well known brands• High quality investor

relations• Established in the market

Clues• Reputation of InverstorSoft

will rise• High spending power• Good opportunities available

Blue Chip

Characteristics• Huge brand name• Public image is paramount• No cash crunch

Clues• Tough to sign a contract• Not very cost conscious• Valuable for building trunt in

InvestorSoft

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PROS CONSIncreased Reach Higher Volumes Relationship building may take time and extra effort

Save direct selling costs invest that money in research on the market

In case od Investorscope, technical expertise was important costly

Effort will be more streamlined and targeted better segmenting

Brand visibility and awareness is low. It’ll take time to increase awareness

Save time and effort for selling once relationship is made

Will not be in direct contact with the consumer lack of control and not in sync with consumer needs

Access to the intermediaries’ network May lead to channel conflict

Q 5. Pros and cons of distributing through intermediaries?

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As a new company, InvestorSoft’s focus should be on Understanding the market Networking

Distributing with intermediaries would give them both of this as they’ll be able to access the intermediaries extensive client list and they would invest the extra money in research to understand the market needs

They can work on building the brand image and credibility in the market so increase familiarity

In the meanwhile, distributors mainly web developers and investor relations consultants could sell the software as a part of their package

Does this make sense for InvestorSoft?

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Q 6. What promotional strategy would you recommend to Chris Bolivar? Be sure to specify how much you would spend, on what, and why ?

Media Cost

Direct Mail $5 for a regular envelop(letter + Brochure)$20 for a large envelope(Folder package +Complete information)

Print Advertisements $500 – Very Small$750 – Small$1000- Medium$1450 - Large

Conference Exhibits $ 5000 for attending annual general conference$5000 for putting up a booth

Industry Promotion $150 per user for try outs

Personal Selling $150 per prospect for sending private links$600 per prospect personal demonstration

Brand Building Recognition Involves no cost, in fact Existing Client pays for it

As per the Information given , different Channels & Cost associated with it.

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Recommended Promotional Strategy Instead of an Aggressive Marketing Strategy, build credibility by acquiring few clients and use their testimonials and the reputation & credibility build to launch an extensive campaign

Direct Mail

This strategy works well for small –cap companies which are looking for a value deal.

100 *$5 = $500

Print Advertisements

These are required to build awareness among the readers who are senior corporate executives and employees of corporate communications firms

Advertise in 5 out of 7 Issues especially the latter half ones as by the time large advertisements are placed few clients would have been converted and hence testimonials can be used, i.e. 3 Small & 2 Large

3 * $750 + 2 * $ 1000 = $ 4,250

Conference Exhibit

First year it did not make sense to set up a booth in a large conference which is attended by key investor decision makers but attending one helps get contacts in the industry which can be later be utilized for personal selling

$ 5,000

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Recommended Promotional StrategyIndustry Promotion

Free trails helps the user understand the quality of the product, especially a complex purchase like a software, hence free trails to all high value & moderate value accounts is necessary

50 * $150= $ 7,500

Personal Selling

In a B2B model, this strategy works the best but has to be used with caution as it’s the most expensive one and at times not even humanely feasible. As the focus is only on Calgary, target 25 Personal Visits and around 50 Virtual Visits

25 * $ 350 + 50 * $ 150 - $16,250

Total Cost for the recommended Promotional Strategy = $33,500 ( An overshot of $8,500)

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Q7. How should InvestorSoft price its service?

Pricing levels Price Comparison with competitors

Economy pricing $295/month Cheapest in Market

Value Pricing $395/month Still cheaper than most competition except for IntegratIR (At par)

Premium Pricing $595/month Still cheaper than most competition except for IntegratIR (Higher)

Pricing Levels for Consideration

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Pricing strategy Details Advantages Disadvantages

Standard Pricing • $295 – Economy Pricing• $395 – Value Pricing• $595 – Premium Pricing

• Simple and Straightforward• Minimum Overhead and

confusion

• Customers might find it unfair based on their size

• A lot of features might be of no use to certain companies for which they will be made t pay

Differential Pricing • $295 or $395 per month for Micro Cap and Small cap Companies (Standard)

• $595 per month Mid cap and Blue Chip Companies(Premium)

• Size based and hence will look fair to all

• Similar features for higher prices to high end customers might not go well with the customers

• Separate processes for records and transactions will have to be maintained

Product Bundling • $99 per month- for Stock data and stock chart bundle• $99 per month for News Release• $50 per month for every additional feature

(automated features, information request and fulfillments, etc.)

• Customer friendly as it enables customization

• Opportunity to pitch for more and more features as company grows

• Wont be able to charge for services that are not required (marginal loss in revenue)

• High complexity in billing and administration

Licensing Discounts

• 10 to 25 percent for one client 3rd party distributors• 25 to 60 percent for 3rd party distributors with

multiple publicly traded companies as clients

• Additional Distribution channel

• Marketing via already established 3rd arty vendors

• Increase in volume of sales

• These agents may end up selling the product at prices higher than InvestorSoft

• Dependence on this mode of distribution

• Lower margins due to discountPromotional discounts

• 15 percent discount to specific customers• Free trials for first three months

• Initiate Trials• Gain Trust

• Cost attached

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Use differential pricing to target companies according to their market capitalization

Provide all basic facilities in the standard plan of the differential pricing and some

additional special services in the premium plan

Offer product bundling services above the basic plans for $50 for every extra service

availed from the options

Licensing discounts are essential to tap the market and gain market share and visibility

Promotional discounts should initiate trials

Recommendation

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