8/23/2017 HubSpot

Case Report: Group 18

Section A

RONISH SATIJA (2014IPM072)

VIPLAV JAIN (2017PGP476)
AKHIL THAVARAYIL (2017PGP401)
HETA VED NIKHIL (2017PGP417)
1) Do you agree with HubSpot that the "rules of marketing" have changed? If so, how? Is
inbound marketing the answer? Why or why not? (Max Words: 200)

Rules of marketing have most definitely changed because consumer decision making process
(for buying a product/service) is making use of new tools. With the popularity of internet,
people have been using search engines, blogs and social media for searching products that suit
their needs. Because now, Web is an interactive medium, anything customers do has the
potential to place them into a market segment. If you can get a customer to your Web site,
every product viewed demonstrates interest. Rather than using the traditional concepts of
market segmentation, companies are instead learning what people are interested in and to
what extent.

Inbound marketing works because it is pulls the people towards the product (resulting in
greater marketing efficiencies) rather than pushing the product towards them. It operates on
the principle of posting content that is useful first and promotional second. By aligning the
content you publish with your customers interests, companies can naturally attract inbound
traffic that can be converted over time.

Initiation of customer interest into a product costs 5-7 times less in inbound rather than
outbound marketing. This means that it is possible for smaller firms with lesser spending
capability to develop an effective marketing strategy.

2) Is HubSpot finding and serving the right set of customers? Given its position as a start-up
company, should it widen its focus to serve any customer that comes its way? Or narrow its
target, by focusing exclusively on either Owner Ollies or Marketing Marys? Or by focusing
exclusively on either B2B or B2C customers?

Yes, other than B2C, Hubspot is serving the right customers.

Hubspot is already ignoring 50% of the leads and narrowing down further can hurt its
chances of growth.
So, Hubspot should focus on both Owner Ollies and Marketer Marys for now, while giving
more focus on Marketer Marys in future.
Also, it should focus on B2B instead of B2C.

1) Reasons for including Marketer Marys:

a) Lower churn rate and longer retention period
b) Higher per month ongoing fee and long-term profitability
c) Less sensitive to price changes and economic recession
d) High future growth rate
 2) Reasons for including Owner Ollies:
a) Major customer segment of Hubspot (73%)
b) Less sophisticated and derived greater initial value
c) Cost, efforts and time for acquisition are relatively low
d) When Ollies used CMS, the churn rate was relatively low
e) Good financial resources available reducing the funding constraint

Although, the company earns almost twice the profit per customer of Marketer Marys than in
Owner Ollies, still it should continue to serve Owner Ollies in the short run, because the total
profit generated through OO comprise a major share and gradually it can try to shift its focus
towards MM.

3) Reasons for focusing on B2B instead of B2C:

a) B2C companies were sophisticated and had their own high performing websites and
significant social presence. Hubspot products didnt match their needs
b) B2C churn rate was significantly high when compared to B2B
c) B2B customers derived greater value from inbound marketing
d) B2Bs selective sales force attention strategy derived greater value from the lead
qualification that Hubspot provided

4) Solutions for some of the problems faced by Hubspot: (Refer to Excel for Explanation)
a) Push CMS for the Owner Ollies as it reduces the churn rate
b) Increase the initial price for Owner Ollies as they leave after taking the initial
advantage. The subsequent monthly prices can be reduced as a result
c) For Marketer Mary, focus more on Analytics instead of website hosting. The monthly
prices can be increased slightly as their demand is relatively inelastic and this can
help in generating funds for expansion

Halligan and Shah should focus on inbound marketing for HubSpot. Though the company
could potentially generate new customers using outbound marketing but it might have a
detrimental effect on the brand image of the company. If HubSpot, a company that promotes
inbound marketing, itself doesnt believe in its product then how can it convince its customers
about the same. Using outbound marketing strategies would decrease hamper the service value
among the customers, leading them to believe that inbound marketing is not as effective as
claimed.