1
Market Expansion Strategy
John Koelliker, Nick Kerr, Jimmy Gillespie, David Mella, Lauren Morris
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DAVID MELLAEconomics
JOHN KOELLIKERInformation Systems
NICK KERR JIMMY GILLESPIEAccounting
LAUREN MORRISMarketingInformation Systems
• Intern with the
Google Community
Leaders Program
• Co-founder of Kore
Baseball Products
• Future Uber intern
• Experience with
small businesses
such as ōEvent and
Prodigix Software
• Knowledge of
networking and
routing technologies
• Experience with
technology startups
and venture capital
• Future intern at
Capital Group
Companies
• Nationally ranked
spikeball player
• Social media and
marketing intern at
a nonprofit
• Future intern at
Sorenson
Advertising
• Aspiring economist
• Experience with
technology startups
such as SHOUT
Gameplay & SEBO
Marketing
MEET OUR TEAM
3AGENDA
12
34
5
EXECUTIVE SUMMARY
CASE BACKGROUND
STRATEGY SUMMARY
GIGABIT CLUB
CONCLUSION
Small Business Strategy
Residential Strategy
Introducing the Gb Club
Strategy Overview
Problem Overview
Components of a Successful Solution
Execution
4EXECUTIVE SUMMARY
THE PROBLEM OUR SOLUTION
KEY FACTORS OF THE PROBLEM - Google Fiber, despite a widely known and well-liked brand image, has had trouble converting Provo customers from the free version of Google Fiber to the paid, Gigabit-speed tiers. We’ve identified three main factors that contribute to this problem: (1) a lack of awareness of the different tiers that Google Fiber offers, (2) low rates of customers who have actually experienced Gigabit speeds and who would know what that means for them, and (3) a low perceived value of the product when compared to the price or competing options.
COMPONENTS OF A SUCCESSFUL SOLUTION - Any successful solution should directly address the three key factors mentioned above. In addition, a successful solution should also have the following qualities: (1) Delight the customer and go above and beyond their expectations; (2) Maintain the integrity of Google’s brand; (3) Scale to other communities and markets; and (4) Put the needs of the customer first. These components will ensure that Google Fiber not only increases its revenue in the short run, but also creates a sustainable business model that will continue to grow for years to come.
STRATEGY OVERVIEW - Our strategy is built on the foundation of resolving the three key factors of Google’s problem: low awareness, lack of experience, and insufficient perceived value. Our strategy will take a customized approach to two main market segments, which are small businesses and residential customers. Introducing: The Gigabit Club.
GIGABIT CLUB FOR SMALL BUSINESSES - The Gigabit Club seeks to provide enormous value for small businesses while simultaneously improving awareness of Google Fiber’s paid tiers. Small business will be provided with Gigabit internet speed and high-speed AC routers to provide an excellent experience to their clients who take advantage of their free wireless internet. Gigabit Club mentors will assist small business owners an getting the most out of their high-speed internet.
GIGABIT CLUB FOR RESIDENTS - The initiative to provide Gigabit speeds to popular small businesses will stimulate growth in the residential market. Residents, having tried the higher speeds, will want to bring that experience to their homes. The Gigabit Club for residents will include benefits that will encourage both customer adoption and customer retention.
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CASE BACKGROUND
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Google announces that it will pick a community to install a fiber optic network--making it the first “Gigabit Community.”
GIGABIT COMMUNITIES
The city of Provo and Google strike a deal. iProvo is purchased for $1 on one condition--that every resident in Provo have access to a free version of Google Fiber
PROVO - THE NEXT GIGABIT CITY
Google announces a small business package for Google Fiber; expansion announced in SLC.
SMALL BUSINESS PRODUCT LAUNCH
Provo residents get the opportunity to have a team install Google Fiber in their homes for a small installation fee.
SIGNUPS OPEN FOR PROVO RESIDENTS
BE THE BEST MARKETING COMPANY
A BRIEF HISTORY: GOOGLE FIBER AND PROVO
2010
2013
2014
2015
Mayor of Provo announces the arrival of Google Fiber.
7
THEPROBLEM:
8/10 people have never experienced Gigabit
speeds for themselves, and have no idea what it would actually mean for them
Awareness
53% of people surveyed are unaware that a paid
option exists, or that their free tier offers only a limited sample of Google Fiber’s full potential
Experience
For the customer, the perceived cost of upgrading to Gigabit speeds are greater than the perceived value of the upgrade. On average, consumers are only willing
to pay $26 for Gigabit speeds as they understand
them.
Perceived Value
THE PROBLEM: KEY FACTORS
Many customers are satisfied with the limited bandwidth of the free
plan, and feel no need to upgrade to the higher-speed, paid plan
8THE PROBLEM: AWARENESS AND EXPERIENCE
EXPERIENCE
Most customers have never experienced true Gigabit internet
speeds, and do not know what these speeds mean in the real world
Many customers who have experimented with Gigabit Google Fiber
may have experienced suboptimal speeds due to poor router
placement, old technology (e.g., not 802.11ac/n enabled), and other
factors
This suboptimal experience--or lack of any experience thereof--gives
many customers pause when deciding whether to switch to the paid
tiers of Google Fiber
Awareness
The first stage of customer adoption for any innovative product is
product awareness
Many customers in Provo are aware of the general existence of
Google Fiber, but may be unaware that there is a paid option that
offers up to 200x the speed of the free version
Google’s marketing tactics have been very conservative up to this
point; this has protected the brand image, but it may also contribute
to the lack of awareness some customers experience
Experience
9THE PROBLEM: PERCEIVED VALUE
What influences customer
purchasing decisions
At the root of Google Fiber’s problem is the perceived value
of its product for consumers in Provo. Though Google Fiber
has a very positive and strong brand image, the possibility of
Gigabit speeds remains an abstract concept for many
consumers. This alone does not provide enough perceived
value to offset the $70- or $130-per-month cost.
Maximizing the value-add
Brand/Image
Cost
Product Value
Actual Value
Perceived Value
*This diagram shows the framework we used to brainstorm ideas and ultimately select our strategy.
We selected a strategy that addresses all areas of this framework, especially the weakest area--
perceived value.
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DELIGHT THE CUSTOMER - For Google Fiber’s long-term success, customers who make
the switch can’t be merely satisfied--they must be delighted. The solution must ensure that
each customer derives the maximum value from their purchase.
1
MAINTAIN BRAND INTEGRITY - Google has always had the intangible “Googliness” that
makes their brand so cool, so well-respected. Whatever the solution, it can’t compromise the
overall integrity of the Google brand.
2
HIGH SCALABILITY - Every location is unique in terms of market segmentation and
diversity; however, the best solution will work across all locations and across all markets.3
PUT THE USER FIRST - Along with delighting the customer with its product, Google must
ensure that its entire value package is in the customer’s best interest. A successful solution
will avoid any predatory or shady tactics used by “the other guys.”
4
Awareness
Experience
Perceived Value
Success:
COMPONENTS OF A SUCCESSFUL SOLUTION
In addition to resolving the key issues of low product awareness, lack of experience, and insufficient perceived value, a successful solution must also incorporate the following four Google priorities:
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STRATEGY SUMMARY
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SMALL BUSINESS RESIDENTIAL
VALUEAWARENESS EXPERIENCE
STRATEGY OVERVIEW
STRATEGY FOUNDATION - The overall goal of our strategy is to increase
customer awareness, enhance the perceived value of the product, and improve
the overall product experience. This is the foundation of our strategy.
1
SMALL BUSINESS - Small businesses will be crucial to the success of our
strategy, as they will create brand awareness while also providing an environment
for Provo residents to experience Gb speed internet.
2
RESIDENTIAL - As Provo residents become more aware of Gb speed internet
and are able to demo these faster speeds, they will be more likely to 3
GIGABIT CLUB - Our strategy of targeting small businesses and residents will
be accomplished through the Gigabit Club - an innovative, inclusive and impactful
way of experiencing Gb speed internet at an affordable price
4
13THE GIGABIT CLUB
A marketing initiative to provide a sense of community for small businesses and residents that want to enjoy gigabit-speed internet and additional benefits.
Impactful.Creates a social wave that will benefit Google Fiber, small businesses, and consumers
Innovative.Provides high-speed internet and supports the growth of Fiberhoods
Inclusive.All residents and businesses in a Fiber city can participate and receive the full benefits
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Gb CLUB- SMALL BUSINESS
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Small Business
Gigabit Club Package &
Benefits
Competitive PriceFirst 50 companies to participate in the Gb Club Program and display Gb Club logo will pay $50 for the first 3 months
HardwareSmall Business will receive a high-speed AC Router upon signing up; router is included with year long membership in Gb Club
Gb Speed InternetSmall business will provide Gb speeds for their employees and for their customers
Gb Club MentorTo show the company how to get the most out of their Fiber experience (i.e. router placement, network configuration, etc.)
THE GIGABIT CLUB - SMALL BUSINESS OVERVIEW
Gb Club PrestigeSmall businesses that join the Gb Club will receive a sticker that can be displayed at their business to attract customers
$
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Google Fiber
Benefits
$
Brand AwarenessCompanies that join the Gb Club will display the Gb Club logo in their business that will spread the word about the Gb Club
Resident AdoptionAfter experiencing Gb speed internet in various local businesses, residents will want to adopt Gb internet at home
Provo Resident Gb Internet ExperienceResidents in Provo will now have an opportunity to experience Gb speed internet in various Provo businesses
Small Business AdoptionThe initial wave of Provo businesses adopting Gb speed internet will create a social movement that encourages other businesses to join the Gb Club as well
THE GIGABIT CLUB - GOOGLE FIBER BENEFITS
RevenueThe Gb Club will result in many Provo Businesses adopting the Business Package, driving revenue for Google Fiber
17THE GIGABIT CLUB - SMALL BUSINESS RISKS
RISKS
1. Router PlacementBusinesses don’t place routers in optimal locations, so customers don’t experience fast, reliable internet
2. Brand AssociationGoogle’s brand will be associated with various local businesses that might reflect poorly on Google’s image
3. Mentor CompetenceAn inexperienced or incompetent Gb Club mentor would prevent customers from enjoying their Fiber experience
4. Product ExperienceMuch of the Gb speed experience and customer satisfaction/dismay will be affected by the business and how they offer the product to their customers
SOLUTIONS
1. Gb Club MentorEach business will have a Gb Club mentor that will ensure proper configuration and setup for their Gb speed internet
2. Gb Club Welcome Packet and MentorEach business will receive a welcome packet and mentor that help the business properly represent the Google brand
3. Mentor Supervisor and TrainingAs a part of the Gb Club Program, we recommend hiring a Gb Club mentor supervisor that can train and help mentors
4. Hardware and Gb Club PackageProper hardware will be provided for businesses to experience Gb speed, and the Gb Club Package will educate the businesses so they can better understand the product
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Gb CLUB- RESIDENTIAL
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Residential Gigabit Club
Package
Competitive PriceResidents will receive a discounted price of $20 per month for the first 3 months
Resident Referral ProgramResidents will receive one month free for each new friend brought signed up for the Gb club as a referral
Gb Speed Internet & HardwareResidents will have the option to receive a USB Wireless Card and AC Router (free after year paid/returnable if undamaged) in order to experience gigabit speed
Gb Club MentorTo show the resident how to get the most out of their Fiber experience (i.e. router placement, network configuration, TB storage, etc.)
THE GIGABIT CLUB - RESIDENTIAL PLAN
Google Play CreditResidents will receive enough credit to stream one movie per month while in the Gigabit Club
$
20
Google Fiber
Benefits
$
Brand EnhancementResidents that join the Gb club will have a positive experience and will develop a stronger trust in the Google brand
Customer RetentionAfter experiencing Gb speed internet in ways that are significant (e.g. streaming movies), customers are likely to continue paying for the Gb club
Resident AdoptionThe discounted price coupled with Google Play Store credit will increase amount of residents willing to adopt
ReferralsWith the referral program, many new customers will be brought to Fiber
THE GIGABIT CLUB - GOOGLE FIBER BENEFITS
RevenueThe Gb Club will drive more traffic to the Google Play Store, which will create additional sales for Google
21THE GIGABIT CLUB - RESIDENTIAL RISKS
EXPERIENCERISKS
1. Hiring MentorsAn undetermined cycle of demand for mentors could potentially create a problem for HR and recruiting
2. Mentor CompetenceAn inexperienced or incompetent Gb Club mentor would prevent customers from enjoying their Fiber experience
3. Trial PeriodCustomers might take advantage of the trial period by using its perks without any intention of remaining a customer after the trial is over
4. Product ExperienceIf the customer experiments with the trial period and does not notice any significant improvements, they might cancel
SOLUTIONS
1. Gb Club Mentor SupervisorA Gb Club Mentor Supervisor will be hired to manage Gb Club Mentor recruiting, hiring, training, and onboarding
2. Mentor Supervisor and TrainingAs a part of the Gb Club Program, we recommend hiring a Gb Club mentor supervisor that can train and help mentors
3. Strategic DiscountThe trial period will discount the monthly payment to $20/month for three months, which will be more than enough to cover the costs of a customer’s trial period
4. Gb Club Mentor and HardwareThe customer will receive a USB wireless card, an AC router, and a Gb Club Mentor to maximize their product experience
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EXECUTION
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• Weekly events around Provo
• Apartment complex events to create awareness
• Fiber Space demos• Door-to-door sales
• Small Businesses will be displaying the Google Fiber Gb Club Sticker at their business with QR Code that links to Gb Club link
• Residents of Provo will be able to experience Gb Speed internet for free in many Provo businesses
• Customer awareness calls to free Google Fiber subscribers to notify them of opportunity to experience Gb speed internet in many local businesses
• Residents that benefit from their membership in the Gb Club will be anxious to share their experiences with friends
• The Resident Referral Program that provides the Referrer with a free month of Gb Speed Internet for every friend that they get to join the Gb Club
DISTRIBUTION CHANNELS
Current Channels Small Business Gb Club Awareness Campaign Resident Referral Program
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2. LAUNCH 3. GROW 4. IMPROVE 5. ENJOY1. PREPARE
GIGABIT CLUB - IMPLEMENTATION TIMELINE
Year 1 Year 2 Year 3 Year 5Year 4
• Finalize Gb Club details (i.e. mentor logistics, onboarding process, sticker design, etc.)
• Create list of target businesses that would be ideal candidates
• Use channels of distribution to increase customer awareness (e.g. billboards, commercials, in-store advertising)
• Finalize Gb Club details
• Begin to contact target businesses and offer discounted Gb Club
• Provide a mentor to businesses to help with router placement and network configuration
• Begin awareness campaign
• Initiate Resident Referral Program
• Provide mentors to all residents to ensure maximized use of gigabit speeds
• Provide continuous assistance to companies/ residents in the Gb Club
• Ensure that all participating Gb Club businesses display their Gb Club sticker at their business
• Continue to onboard companies/residents that are interested in joining the Gb Club
• Reflect on the first year of Gb Club and make plans for improvement
• Consider adding additional benefits for those involved with the Gb Club including referral discounts for businesses and other value-adds
• Prepare to launch the Gb Club in other Fiber cities
• Enjoy the benefits and prestige associated with the Gb Club
• Repeat the process in other Fiber cities and create a Gb Club internet experience that can be found across the country
Small Businesses
Residents
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Fixed Costs Cost per Resident Cost per Small Business
ESTIMATED COSTS OF STRATEGY
• Mentor supervisor
• Training materials
• 3 month trial
• AC Router & USB card
• Free movie streaming
• Cost of mentor visit
• Transportation of mentor
• Gigabit club info box
• 3 month discount
• High-speed AC router
• Info box, gigabit club cards and stickers
• Google mentor visit (more intensive)
• Transportation of mentor
$377.00in additional costs over 5 year period
$43,000per year over 5 year period
$407.00in additional costs over 5 year period
26PROJECTED FINANCIAL BENEFITS
Additional Revenue - 5 Years
$5,713,752
Additional Profit - 5 Years
$4,564,448
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• Partnering with different companies to increase the actual value of Gb club membership
• Examples: Vidangel, WatchEspn, Hotels
• Areas such a local parks will have small Fiber hotspots where Gb club members can login and access gigabit speed internet
• Google will select a few home offices to “fiberize” make a collective video for use in commercials
• Improves Google image and connects with people
• Local citizens will be able to see on a map exactly which of their neighbors have faster and how much they pay per megabit
• Seattle example
Local Hotspots “Fiberizing” Homes City-Wide Speed TestsPartnerships
FUTURE IDEAS
28SUMMARY WALKTHROUGH
Jake saw a billboard for the Google Fiber Gb Club and
then saw a sticker at Starbucks. He scanned the
QR code out of curiosity and learned more about the residential Gb Club plan.
Awareness
Having only ever used the free fiber plan, Jake decided to sign up for the discounted 3 months to see if the gigabit
speed would be worth it.
Adoption
Customer Care
Jake loved the speed of the free movie stream. He told his neighbor about the Gb club and received a free
month when the neighbor signed up as well.
Growth
Jake chose to include the new AC router and the
mentor showed him where to put it and how to get the
fastest speeds. The mentor also showed Jake how to upload all of his photos using the TB of storage.
Meet Jake
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THE GIGABIT CLUB
YOU’VE TRIED THE FREE VERSION,NOW COME JOIN THE CLUB.
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QUESTIONS
31COST ASSUMPTIONS - RESIDENTS
Residential 3 month Discount $50.00 per month 3 months $150
Gigabit Box $8 1 $8
AC Router $80.00 1 $80.00
USB card $20.00 1 $20.00
Stream Movies*** $1.00 per movie 30 $30.00
Gas per visit** $0.50 1 visit $0.50
Cost per visit* $18.67 1 visit $18.67
Cost per resident $307
*Google Mentors get paid 14$ per hour and make 6 visits per 8 hours worked.
** Google Mentors drive 100 miles per week with 20 MPG and $2.00 gas prices
*** Customers stream free movies 6 out of 12 months per year on average, so a total of 30 movies over 5 years.
32COST ASSUMPTIONS - SMALL BUSINESSES
Robust AC router $100.00 1 $100.00
Small Business 3 month
discount $50.00 per month 3 months $150
Gigabit Box $8 1 $8
*Gas per visit $0.50 1 visit $0.50
**Cost per visit $28.00 1 visit $28.00
Gigabit Cards and Stickers
(advertisment) $24.00 per year 5 year period $120.00
Cost per small business $407
*Google Mentors get paid 14$ per hour and make 4 visits to small businesses per 8 hours worked.
** Google Mentors drive 100 miles per week with 20 MPG and $2.00 gas prices
33COST ASSUMPTIONS - FIXED COSTS
Mentor Supervisor $40,000.00 1 $40,000
Training Materials $3,000.00 1 $3,000
Total fixed costs $43,000
*We assume that the awareness campaign, and other tech support is included in the costs that Google Fiber already has. These fixed costs include additional costs for our strategy besides Google Fiber’s current costs.
34COST ASSUMPTIONS - REFERRAL PROGRAM
• If we estimate that each customer refers 1 household or business on average, then the costs would be be $377 for a resident, and $507 per business.
• Although this would increase costs, we estimate an increased revenue as well.
Resident Referral Program
Year Augmented cost of
strategy
2016 $43,000
2017 $383,576
2018 $630,572
2019 $976,554
2020 $1,391,504
$377.00in additional costs over 5 year period
$507.00in additional costs over 5 year period
Cost per Resident
Cost per Small Business
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More switch to Fiber More paying residents More paying businesses
BENEFITS OF STRATEGY - ESTIMATES
• With increased awareness of google Fiber due to the gigabit club we expect that 50% of Provo’s 35,000 households* will have fiber (free or paid) by 2020. (Estimate: 23% of households in provo use Google Fiber currently
• Compare this to our estimate that 41% of homes will have fiber w/out our strategy.
• We expect that 37% of Fiber households will pay for the 70$ deal by 2020 with our strategy. Compare this to an estimated 19% w/out the strategy. (Estimate: 15% of current Fiber households have $70 deal)
• We estimate that 20% of Fiber households will get the 130$ package by 2020 compared to an estimated 14% w/out our strategy. (Estimate: 10% of current Fiber households have the $130 deal)
• Of the estimated 1,000 small business in provo who Google Fiber can target, we expect that 41% will pay for Fiber by 2020. (Estimate: 10% of small business currently use Google Fiber)
• Compare this to and estimated 30% of small businesses who will adopt google fiber w/out our strategy
*info about households in provo from http://quickfacts.census.gov/qfd/states/49/4962470.html
36COST vs. BENEFITS
Years Rev w/o Strategy Rev w/ Strategy Cost of Strategy Profit from Strategy
2016 2,390,100 2,390,100 $43,000 -43,000
2017 2,981,034 3,340,054 $325,196 33,824
2018 3,746,700 5,013,256 $528,162 738,394
2019 4,714,755 7,703,305 $810,234 2,178,316
2020 5,913,288 11,627,040 $1,149,304 4,564,448
37Survey Results
38COST vs. BENEFITS
39COST vs. BENEFITS
40COST vs. BENEFITS
41COST vs. BENEFITS
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END OF APPENDIX
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