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Dropbox: “It just works” Ashan-wa Aliogo Qualitative Customer Value Proposition -Clear product/unmet need: Seamless synchronization of documents between personal and shared computers that works online and offline, isn’t buggy. Cloud storage + ease of use=competitive advantage -Both B2C & B2B: targeting “power” users + businesses. Provides a larger target market but introduces dilemma of which group and features to prioritize. -Good customer reception: Vote Box allowed for direct feedback from users and testing new features. Simultaneously building and learning from customers. Go-to-Market Strategy -Freemium/Premium model: Users can fully experience the product compared to competitors. Conversion difficulties. Prices are not as competitive: $5/month/10G vs approx $4.58/month w/ unlimited storage (Carbonite). -Partnerships through pre-installation on portable devices like Android. Good but dependency is risky especially if Google releases in-house version of cloud storage -Organic Growth (virality + word of mouth) due to high customer acquisition cost. Model works for B2C but marketing is needed for B2B expansion. Technology & Operations Management -No business development team: challenges expansion to B2B and release of new product lines. Too dependent on word of mouth/virality. Profit Formula -Rapid expansion required to increase barrier entry from top competitors like Google and lock in customers. -Valued based on ease of use therefore quality user experience is key. Quantitative Premium vs Freemium costing + Marketing -$5.12M/year in cost from freemium users but $0 annual revenue. -$4.6M/year in cost from premium users and $10-$15million annual revenue. -Profit ranging from $300K-$5.3M annually -Costing does NOT include marketing costs due to reliance on viral marketing + word of mouth + lack of business development team. -Top competitor Carbonite incurred $14.2M in debt due to marketing efforts to breaking in B2B space therefore Dropbox will more likely have to spend more to switch over customers + combat native competition due to high risks involved like data corruption and destruction. -As of now they have not perfected their B2C customer acquisition funnel as acquisition is still very, very high (approx. $300/paying client compared to $99/year on premium service). Ranking -Yet to dominate niche: Ranked 6th in consumer backup meaning competitors still have key features that make them preferable despite Dropbox’s ease of use and “sexiness”. Recommendation • Do not venture in B2B product. – Marketing/advertising/Conversion expenses (an inevitable cost) will be too high with their current margins. • Especially since they have little experience in advertising. • Work on improving the acquisition funnel, increasing conversion rates, and expanding profit margins. • Be more aggressive in recruiting a business development director. – Venturing into this field will increases competition and can distract the team from dominating the consumer backup market. • Head to head competition will be very difficult especially with no business development director. They can’t be reliant on viral marketing or word of mouth in B2B as risks are a lot higher. Strategy needs to be thoroughly thought out. • Continue to improve UI and product features to become more competitive within the consumer backup niche before branching out. • Better to be exceptional at one thing than mediocre at several.