Synthesizing the Analysis to give a professional answer (i.e. clearly tell the client "Do this!")
Passion Connect: Turning Passion into Profit
Introduction
Passion Connect is a self-established company aimed at aiding people in India to recognize their tendencies and passions and convert them to income. The company's first objective would be developing the people's gifts and capacity and enabling them to perceive the tendencies and not calling them off. The free program of the membership is the company's selected strategy, which assists them to find the highest place among other global and, more specifically, the Indian brands. The company introduces a model that contains three layers to clarify itself, developing with instructors, and also providing the novitiate courses. The investors should not feel they are being exploited, so they should attentively care about the monetizing strategies. Besides, this strategy would enable the investors to keep Passion Connects’ central objective. The so-called company enjoys different monetizing choices such as the business to business (B2B) and business to consumer (B2C) ones. It is worth mentioning that the company aims to provide an organization that is not looking for mere profit and causes the followers to trust them that they are not exploiting the others. Deep exploration results demonstrate that those methods which do not go after the followers have the opportunity of deleting the advertisement by means of content sponsoring, advertisement demonstration, events` expenditure, market-linked with the commission.
In the end, preparing this paper, we will present a detailed analysis of the company's problems, challenges, SWOT analysis, and Porter’s five forces model and finally recommend the best helpful suggestions to make the most successful changes to the company.
Problem Statement
Passion Connect is a start-up founded in 2013 in Bangalore, India. The platform has registered 40,000 users, 100,000 monthly views, and 3,000 daily visits through its website and mobile application (Ivey Business School, 2018). The business vision is to help its users connect with their passion and develop it through connections that include mentors and experts' assistance in each of the available categories.
During 2017, the growth vision for Passion Connect led its founders Karthik Kittu, Abdul G Sait, and Shubham Deva to seek to obtain a round of financing called "Series A," but first, they have to meet the return on investment of their venture capitalists. The business seeks to meet this objective through a monetization strategy that will allow its platform to grow.
The growth objective considers investment in sales and marketing as a differentiating factor that will allow it to achieve its founders' vision. It also seeks to implement a useful model that turns its network of users into an effective and consistent source of income and keeps their user’s satisfaction. The strategy should raise the opportunity for smartphone adoption in India, estimated at 730 million users by 2020 (Statista, 2017).
The monetization strategy must include the optimal combination of business to consumer (B2C) and business to business (B2B) approaches aligned with the organization's needs and considering the preferences of its users in the specific market segment in which they participate.
Identifying the optimal monetization strategy will allow Passion Connect to achieve its successful implementation, meet the investors’ objectives, and achieve its business vision of a profitable business model.
Problem breakdown and prioritization
The main problem of Passion Connect is to figure out the monetization strategy for the platform before Series A funding, and the founders are struck with the dilemma of monetization models stated below:
Business to consumer model (B2C):
· Subscription-based model: This model will give the company a continuous stream of revenue and outstanding lifetime value, but it comes with the risk that the platform has already acquired many users, and implementing this model at this stage might push away the users.
· Freemium model: This model allows bringing a large number of users onto the platform and then monetizing its premium features without pushing away its user base. But with the risk that it can be inconsistent.
· E-commerce store: This model requires a radical business shift in the company existing business model as it involves setting a supply chain, managing inventory, logistics, etc., and the company must rework its sales margins. But executed right, it can lead to consistent revenue with a sustainable revenue model.
· Mentorship marketplace: This model can be promising as the current feature is under development, and the company needs to work around the design and implementation of the feature and see how users react to the pilot. But it can be entirely not reliable as it's untested, and the company doesn’t have an idea of how users might respond.
Business to the business model (B2B):
· Fees for the transaction on event or signups: This model gives the company an opportunity of taking advantage of its user base to sell the passion related events, but it comes with the challenge of what should be the pricing model is it on transaction fee, flat fee, sales volume, etc.
· Display advertising: Even though this can be the easiest way of monetizing from its user base, it can fluctuate and disengage the users with continuous ads.
· Sponsored content: This model can be promising as it can display the content according to the interests of the user base and help them make the decision, but this monetization model can also be not consistent if it is not planned right.
· Now, based on all the above options, the founders should make a decision whether they want to pursue one of this model or a combination, and they have to be very careful that whatever monetization model they choose has to complement the core vision of the company and satisfy its users.
Analysis
SWOT Analysis – SWOT analysis is known for the strengths, weaknesses, opportunities, and threats related to the business, which assist the organization in managing the company effectively and maintaining competitive advantage in the market.
Strength
· Economies of Scale- Presently, the organization is working towards the maintenance of their cost and the prices of their services, which is assisting the business in building economies of scale and will help in fighting economic instabilities in the future.
· Unique products- As the Passion Connect, turning passion into profits is a new business idea that leads to the uniqueness of the product. Therefore, a unique offering is a strong point that is helping in the growth of the company.
· Consumer-centric- The other strength of the organization is that it is focusing more on consumers rather than products. This characteristic is helping the business to understand the group of customers and their emotional behavior more deeply, which ultimately helps in influencing customer's behavior.
· Unique product- The organization has developed with a unique idea; therefore, they are also providing unique services to their customer, which is the main reason for the enlarged customer base.
Weaknesses
· Research and Development- In order to raise the sales of the organization, the company must take steps to do more research and development because, after many years of operation, the company is not sure about the subscription fees and other charges they are planning from the customers. Therefore, Passion Connect turning passion into profits, must take steps for research and development in order to know about their niche market and customers preferences.
· Quality management- Due to the various players and alternatives available in the market, the company must focus on the quality of the services which they are delivering to their customers because there is minimal cost for substituting products.
· Investment decision- As the organization is lacking in financial decisions, therefore, it is necessary that the company must formulate various financial plans for the development as these will assist the organization in knowing about the different financial routes that are available to the company and also help them in earning more money.
Opportunities
· E-commerce - Online platforms have great importance in the modern world. Therefore, in order to boost the sales of the organization, social media platforms must be used to interact with the customers as this will provide an opportunity for the company to reach their audience in a more effective manner.
· Technological developments- Regular technological development will provide opportunities for the business to remain updated in the market and assist in influencing their upcoming incomes and attractiveness.
· Focusing on new segments and building customer loyalty- Due to limited financial resources, the company at a particular period of time is focusing on the narrow market segment. Therefore, organizations must focus on various options to monetize as this will provide the opportunities to broaden their customer base, which will ultimately assist in increasing the level of loyalty, competition, and business intelligence.
Threats
· The entrance of new players in the market- The company may face a threat of entry of new competitors of the organization, which will limit their income and earning. Therefore, in order to compete in the market, the business must focus on price, cost, and investment as these are the factors that are going to affect the share of their pie.
· Limitations on earnings- More players in the market means various alternatives that are available to the customers. Therefore, the entrance of new businesses into the market will limit the existing income of the organization.
· Costs for adapting the platform - The high costs involved in adapting the platform to the new strategy can bring the organization a threat of not being able to perform it because it is out of budget. This is an important event to plan ahead because it can affect the ultimate purpose.
Porter’s Five Forces Model
In a business context, Passion Connect's financial performance depends on five external factors: new entrants in the market, substitute products or services in the market, rivalry in the market, buyer’s bargaining power, and finally, suppliers’ bargaining power.
The threat of new entrants in the market: In India, the barriers to entry in the Passion Connect market are not high. Government regulations are not strictly due to the relevance of technological innovation and entrepreneurship. Passion Connect is an e-platform, so the economies of scale can be achieved because research has revealed that in 2020, the smartphone adoption for users is 730 million only in India. For starting this type of business, the capital requirements are not too much; however, government financial schemes support the businesses. The cumulative experience may become a barrier for new entrants due to the expertise of the existing business owners. Overall, it can be estimated that there are fewer barriers to entering the market, along with many challenges.
Buyers’ Bargaining Power: As a start-up, Passion Connect buyers involve only users; however, in the future, its customers will include the business to business approach (B2B). The increased customer base can increase the buyer's bargaining power. Moreover, the objective is not only to assist the people in identifying, nurturing, and living their passion but also the possibility to create an online store that will sell the products to the people relating to their passion. Here, owing to the presence of the competitors, buyers will have control over the prices. There is a need for the company to make the differentiation by using market tactics. Buyers switching costs will be low if they are brand loyal and satisfied with the services of Passion Connect.
Supplier’s bargaining power: While expanding the business, Passion Connect should be careful regarding the suppliers because a single supplier has more bargaining power and gives more high switching costs. In contrast, multiple suppliers offer less switching cost and have low bargaining power.
The threat of substitute products and services in the market: Passion Connect is currently not facing the competition of having similar and substitutes products. However, there may be indirect substitutes like people can use social media for free such as Facebook, Instagram, and Twitter, to unleash their hidden talent and pursue their passion. Here, Passion Connect must make trustworthy relationships with the users and to make their differentiation in the market.
Rivalries: To maintain a competitive position in the industry, Passion Connect should concentrate efforts on its target segment and on a differentiation strategy. As the organization was following the continuous improvement principle, their registering rate of users was increasing at a fast pace, but it was failing in getting high returns. Resultantly, there is a need for the company to focus on the values that they are providing to their users, which leads to the conversion of the users into paying customers.
Synthesizing the Analysis to give a professional answer (i.e. clearly tell the client "Do this!")