General Question:

Which segment should HubSpot Target? B2B or B2C? Owner Ollies or

Marketer Marys?

Kenan-Flagler Business School

Marketing 741

NAME
SECTION 8am/9:30am/11am/2pm

Executive Summary
State your recommendation. Should HubSpot target B2B or B2C companies? Owner Ollies or
Marketer Marys? Keep this brief.
The rest of your write-up should provide arguments to support your recommendation.
The figures and tables should be used as references to support your arguments.
I believe that HubSpot should only target the sub-segment B2B in Owner Ollies. My
recommendation is based on the fact that the potential market value for this segments is the
highest amongst all other segments in the matrix. Also, the unique offering that HubSpot
provides is best served for the requirements of this customer segment.
Target Market Selection
Should HubSpot cast a wide net or narrow their focus? Effectively argue that HubSpot should
narrow their focus using frameworks we have discussed, as well as points from the case.
They should narrow down their focus and target only one segment of customers. Since the
company has certain unique offerings compared to its customers, it should position itself in such
a way so that it can provide maximum value to the customer segment it targets. The customer
lifetime value, retention rate and the potential market value is quite different for different
segments so it makes sense to select the segment which results in higher values for these
parameters. Also we should root out segments which may require very different and sometimes
traditional outbound advertising and promotions to improve lead generation and conversion of
opportunities
Should HubSpot target B2B or B2C customers?
They should specifically target the B2B customers. Reasons being:
1. The CLV of this segment is higher, the market potential is highest and the acquisition cost
low. The customer retention rate and in turn their loyalty can be improved though high
can be improved further by attracting the customers to use the CMS service
2. Marketing budget dedicated for inbound marketing in the case of B2B customers has
improved substantially so there is a huge market and scope which can be exploited by
HubSpot.
3. The fact that HubSpot provides consulting services comes as a unique offering for B2B
customers as they do not get such services from any other agencies.
4. Inbound marketing is actually more beneficial to B2B customers based on the kind of
customers they have and the product they sell. Since HubSpot specializes in such
offering, it makes sense for HubSpot to focus on B2B customers.
1

General Question:
Which segment should HubSpot Target? B2B or B2C? Owner Ollies or
Marketer Marys?

5. The B2C customers are already experienced adopters of the inbound marketing
technique. They only require high level, complex applications and analytical tools which
could improve the benefits that they are already reaping. Their requirement is conflicted
with the product offerings that HubSpot offered.
6. The churn rate is much higher in the B2C segment compared to the B2B segment
especially in the case of small businesses segment.
Should HubSpot target Owner Ollies or Market Marys?
I believe they should focus on Owner Ollies because of the following reasons:
1. HubSpots low cost and ease of use for Web 2.0 novices are its competitive advantages. The
fact that OO is looking for quick and simple solutions gel well with the positioning of
HubSpots products and create a unique value compared to the competitors offerings
2. Though the CLV of MM is much higher than OO but the total potential market value and
retention rate and the acquisition cost for OO is way higher than MM
3. OO has requirements in all 3 segments of the customer funnel cycle, while MM is more
concerned with only certain aspects of the offerings at HubSpot. Targeting MM would lead
HubSpot to a situation where it would not be able to utilize all its product offerings
efficiently. Also HubSpot has a unique offering which replenished the needs and
requirements of all 3 segments of the funnel cycle. None of the competitors offer that.
4. Also the potential benefit for HubSpot in the future is to move its customers to its own
CMS. As per the data provided, we can reasonably assume that OO are more inclined than
MM to select CM
Should HubSpot start using traditional outbound marketing techniques? Keep this brief.
Limited and subtle outbound techniques like online advertising can actually be applied. They can
also target advertising events like trade shows which have the presence of B2B companies. This
could help attract visitors and prospects. But they should never adopt the traditional outbound
techniques like cold calling as they will end up diluting their own brand.
Should HubSpot move away from the SaaS model to a software-as-a-product model? That is,
instead of a subscription service, they would charge a single high price. Keep this brief.
I believe they should continue with the SaaS model. Most of the customers that HubSpot is
targeting belong to the Small and Very Small segments. Charging an upfront high price to such
customers could act as an obstacle to their acquisition, as they might have a limited budget for
obtaining inbound marketing services.
Recommendation:

General Question:
Which segment should HubSpot Target? B2B or B2C? Owner Ollies or
Marketer Marys?

Based on the quantitative and qualitative comparison presented above, I believe that HubSpot
should narrow down and focus only on B2B customers in the OO segment.

General Question:
Which segment should HubSpot Target? B2B or B2C? Owner Ollies or
Marketer Marys?

Figures and Tables:

Table 1: Estimation of Customer Value
Evaluate the CLV of individual customers from each segment by filling in this table.
OO

MM

B2B

B2C

CMS

Non-CMS

Source

4.30%

3.20%

3.30%

6.00%

2.10%

5.50%

Table A

95.700
%

96.800
%

96.700
%

94.000
%

97.900%

94.500
%

250

500

375

375

375

375

Acquisition cost

$1,000

$5,000

$3,000

$3,000

$3,000

$3,000

Consulting Fee

$500

$500

$500

$500

$500

$500

Total AC

$500

$4,500

$2,500

$2,500

$2,500

$2,500

0.50%

0.50%

0.50%

0.50%

0.50%

0.50%

$4,708
.33

$9,013
.51

$7,368
.42

$3,269
.23

Churn Rate
Retention Rate
Margin

Interest
(monthly)
CLV

$11,923
.08

$3,750.
00

Table 2: Estimation of Market Value

Estimate of the size of each potential market by filling in this table.
-State your assumptions based on details from the case

Number of
Potential
Customers
Value per
customer
(from Table 1)
Total Potential
Market Value

OO

MM

B2B

B2C

1,676,130

526,355

1,101,243

1,101,243

4,708

9,014

7,368

3,269

$7,891,778,75
0

$4,744,307,90
5

$8,114,418,42
1

$3,600,215,86
5

General Question:
Which segment should HubSpot Target? B2B or B2C? Owner Ollies or
Marketer Marys?

Table 3: Providing Value to the Customer

What value does each customer group receive from HubSpot? Be descriptive.

Customer Needs

Value Provided

(i.e. what help do they need)

(i.e. how well does HubSpot fill their need)

Their most important priority is finding

leads and they did not have a marketing
specialist to do that. Also, they needed the
resources, assistance and the knowhow
(e.g. search engine optimization) to
employ inbound marketing through Web
2.0.

HubSpot fills their requirements very well.

They have the SEO and Lead Tracking &
Intelligence which are very important
features for OO. They also provided
features like Inbound marketing advice and
website editor which could prove
beneficial for OO

They mostly required evaluation and

analytical support for their own program
and measuring the results

Not as much as OO in the initial part of the

relationship. They procured their value in
the longer term. HubSpot had a lot of
Analytics applications for them like
Business Blog, Marketing and ClosedLoop Marketing

Inbound marketing resources and leadqualification analysis for providing in

depth information to the customer and
zeroing down on the right customer
respectively. They required a lot of handholding to become aware of the new
marketing applications.

The derived a lot of value from HubSpot

especially from the lead qualification
analysis.

High level content templates. Needs the

extra thrust to produce better results
through inbound marketing .

Mostly high level stuff and applications

related to analyzing and qualifying leads
and closing the sale like salesforce.com

OO

MM

B2B

B2C

General Question:
Which segment should HubSpot Target? B2B or B2C? Owner Ollies or
Marketer Marys?

integration