The Foursticks situation was a case of re-segmenting of an existing market. A situation involving entering a new market includes the introduction of a technology that takes 100 percent of the share market (Cooper and Vlaskovits, 2010). In addition, no other technology exists apart from the one that the company introduces, and technology will cease to be used by the customers when a new technology is introduced and replaces the existing one altogether. According to Cooper and Vlaskovits (2010), re-segmenting of an existing market involves lowering costs or providing new functionality that provides solutions to existing problems. In the Foursticks situation, the young entrepreneurs wanted to produce software that would solve the problem of quality of service in networks and improve network performance. In the field, of network monitoring, Cisco already existed and Foursticks aspired to become another Cisco. The aim of Foursticks was to develop a more refined system of network monitoring to reduce the problems that face most of the companies. Consequently, Cooper and Vlaskovits (2010) argue that in cases of re-segmenting a new market, there has to be a particular market type that customers are already using. For instance, in network monitoring, a number of competitors such as Cisco, Juniper, Allot and Netscout among others existed. Additionally re-segmenting an existing market requires substantial amounts of funds to be able to compete with other existing players in the market. Foursticks sought funding after potential investors had analyzed the viability of the technology application in the market.
View on the Merit of the ‘Differentiators’ That Foursticks Built Into Their Initial Product Offering
Since most of businesses and governments, using networks relied heavily on the quality of information and speed, Foursticks strategy to introduce a one-second interval to capture traffic statistics were necessary. Previous vendors in network monitoring had employed control solutions to capture traffic statistics at 15-minute intervals. Replacing this with the one-second interval would boost services of users and consequently, attract many companies to choose to try or use their technology. However, to develop new software, for a company that lacked enough funding when starting, could be quite challenging. In addition, Foursticks did not carry a comprehensive research on other companies offering similar software. Consequently, they did not have a specified methodology on how to develop software that could capture traffic statistics at one-second intervals. Furthermore, they could have assessed the performance of the software developed by the company that provided software that captured traffic statistics at one minute intervals. Foursticks offering an unlimited range of network pipes to its customers could introduce the problem of slowing down network systems. For instance, if a company would initially use 10 network pipes at 15-minute intervals, then providing an unlimited number of pipes at one-second interval would result in increased congestion of traffic. The Foursticks’s strategy to develop software that was compatible with different servers was possible if proper research and consultation was done prior to developing the software, in the various target markets. For example, in Germany, the Foursticks software would require different models of computer servers to run. Additionally, Foursticks’s strategy to focus on large businesses was not the right decision since they had not yet tested the capability of the software to handle larger ISPs, where speed was a crucial aspect. Likewise, network managers can be reluctant to use new and unproven software, developed by a start-up company, in their networks.
Critical Factors for Foursticks to Consider in the Marketing and Sales Approach
One of the factors that Foursticks could have considered is the political and legal factors of the countries where there were potential clients. Of most importance are the changes in tax laws and government regulations regarding the use of certain technology in the client’s country. Government regulations become important in protecting the use of the new technology that a company introduces in country (Boulay and Pohlman, 2003). In addition, targeting to supply government agencies in the various countries can prove to be profitable to the organization, as this can improve confidence in the application of the fresh technology, in the country. Likewise, understanding of the laws in the various countries can help the company to avoid unnecessary costs that may result from not following the laws of its country and different countries.
Technological factors are other criteria that Foursticks could have considered. A complete and comprehensive analysis of the technological needs required by a market is important prior to developing a new technology. Understanding of the technological needs and problems currently facing the market can assist in developing a technology that suits the different market types effectively (Jolly, 1997). This will allow the company to develop software that will suit the specific needs of the clients. In addition, this will require the company to develop a range of software applications that will serve the different needs of the various clients. Furthermore, developing a product that will provide unique solutions will assist the company the company in sustaining its technology in the market. Hence the company should focus is developing products that have a higher chance of being available in the long term. During the developing and testing process of the software, the company can be able to determine the capabilities and limitations of the software , and this can help in improving the software. Consequently, information gained during this process can be used in informing the client on the capabilities and limitations early enough before finalizing on the finished product. This will help ascertain whether the product will be viable in the market despite the limitations present.
Foursticks could also employ a number of marketing techniques to increase their presence in the market. Use of advertising techniques could help in improving its presence in the market. In addition, provision of trial facilities to customers could assist in gaining crucial information (Lamb, 2011). This then could be used in improving the software to meet the customers’ needs. Furthermore, since Foursticks was a new business in an already existing market, providing their products at discounted prices could help them achieve a competitive advantage over their competitors. This would be helpful in competing with a company such as Packteer. Consequently, the Foursticks Company could have first established themselves in their own country to obtain a proven record of accomplishment before venturing into the international market. Further, Foursticks could have conducted a number of trade shows to boost the popularity of their product and invite potential customers, through direct mail, to come and try out their new product.
Another point to consider was to ensure that the start-up costs were minimal. The initial money that Foursticks was able to obtain was used on employing leading names from various companies. This increased the operation costs since these personnel had to be paid a lot of money, as personnel were considered crucial to the Company’s success. Also, hiring of the leading names did not result to an increase in sales. Additionally, the hiring of new employees was not properly done since it was not based on merit. For example, the VP of sales in Asia, who had no experience in managing a technology start-up company and managing a sales team such as the one Foursticks, was a given such a large responsibility. Furthermore, instead of looking for affordable office space, Foursticks sought to use offices that were located in the upmarket areas and this proved to be costly. In addition, before hiring of a large team, Foursticks could have hired a relevant consultant for advice since they had no experience in developing and running a significant business from scratch. The young entrepreneurs could have developed the company as a small team rather than hiring many personnel during the initial stages of the company start-up. Moreover, managing a small company could have been less costly since the individuals that formed Foursticks had exposure in the IT business, in areas such as sales and marketing, software development and regulatory arrangements.
Outcome if Foursticks had followed Advice Above
Rather than focusing on large businesses, Foursticks could have focused on medium sized business that needed network monitoring services. This would have helped in boosting their sales initially. In addition, they could have been able to meet the demands of the medium sized business since they did not require high speeds in their network operations. Furthermore, the use of different marketing techniques such as trade shows and contacting potential clients directly could have boosted the image of the company. Besides, performance of tests during the development stage of the software could have provided them with the opportunity to produce a better and more refined product that could address various clients’ needs in the different geographical locations. Additionally, provision of their product at a discounted price could have increased sales since customers could be able to try the new product and compare it to other similar products offered by other competitors in the market. Furthermore, starting as a small company could have been beneficial to Foursticks since they would be able to penetrate the market in their home country. Consequently, this could have provided a record of accomplishment of the capability of their software to potential clients located in other countries.
Strategic Sales and Marketing Actions Used by Foursticks
NetPriva used some of the strategic and marketing actions to secure an exit strategy within three years. These included selling of the ex-Foursticks products to the existing customers based, in Australia and Europe, to boost the company’s credibility. Another strategy involved halting any important technical development of the existing ex-Foursticks products. Additionally, NetPriva signed a agreement with a US company to develop software on a no risk hourly rate. This would assist in reducing salary costs in the initial year.
Current Market Opportunity and Proposal for Improvement
The current market opportunity for a start-up company in the network performance is viable. Introducing new ways to reduce traffic congestion can help improve the network performance in many organizations. Consequently, many organizations are expanding thus networks should be able to handle large amounts of data flow especially in situations where the companies are dependent on the networks to function effectively. Companies engaging in the network performance market should ensure proper analysis of the market to ensure success and a long-term guarantee of their products in the market.
Boulay, D.M. and Pohlman, K.J. 2003. The Entrepreneur’s Legal Guide: Strategies for Starting,
Managing and Making Your Business Profitable. Illinois: SphinxLegal.
Cooper, B. and Vlaskovits, P. 2010. The Entrepreneur's Guide to Customer Development.
Jolly, V.K. 1997. Commercializing New Technologies: Getting Mind to Market. Boston:
Harvard Business Press.
Lamb, C.W. 2011. Marketing. 5th ed. Toronto: Cengage Learning.