Essay On Alternatives

Business Case Recommendations

18.02.2015
Business Case Recommendations
The Fremium experience brought consistent business to Dropbox, which summed up to 200 million in 2013, yet, strong rivals are emerging on the cloud storage market, threatening its position, market share and even its existence. For avoiding such situations, the company’s main objective is to find proper ways to reinvent itself, in order to remain competitive and to increase its market share, despite the growing competition, coming from strong internet brands.

Giving the current situation, in which Internet giants such as Apple, Amazon, Google or Microsoft enter the cloud market, wherein Dropbox holds 17% of market share, Dropbox needs to reevaluate its business strategy.

The company could consider adapting its offer, by creating more affordable prices for the free clients to become paying users.

Likewise, another alternative for Dropbox would be to create strategic partnerships with software companies, for providing a more comprehensive experience for its customers.
For remaining competitive on this market, the company needs to invest in its image, generating mental association for its brand with the cloud storage activity.

Recommendations

Through price flexibility strategy the management of the company should consider creating annual or monthly subscriptions for five users, having access to the same password, based on the corporate model. The package for four users must be more affordable, in order to encourage more people to pay for cloud storage, just as they pay for online streaming movies. With a typical $25/month for five users, the company would reduce the expenses of “$1.32 per year for average user” (Teixeira & Watkins, 2014, p. 4) and would increase its market share.
Developing strategic partnerships with software companies such as Adobe Photoshop would generate increased market share and higher competitive drive for the company, as it would offer a more complex service. Users utilize Dropbox service for sharing photos or videos, in which case, a partnership with Adobe, which would include several features for improving the quality of the shared photos or videos with friends would represent a significant advantage, resulting into differentiation.
For generating mental association between Dropbox and cloud storage, the company would have to invest significantly in advertisement and other companies have higher budgets to support such endeavors. Therefore, this strategy should be pursued solely through referrals, following the marketing model that brought success to Dropbox so far. Extending the referrals to the users (non-corporate segment) and integrating social media – encouraging influencers to create social media content (online word of mouth) (Kumar & Shash) through which the brand will be associated with the cloud storage service would be an effective approach.

Implementation

For implementing the price flexibility strategy, which allows non-corporate users to utilize several features of Dropbox’s service, the company’s management will need to promote this possibility. Investing 2% of its profits in online word of mouth and advertisement is the method required for implementing this strategy. The key performance indicator (KPI) of this strategy should turn at least 1.50% of the non-paying users into paying clients, reducing the annual expenses for the free user storage.
Adobe should be approached for creating strategic partnership, which would allow a common package of the two companies’ products. The editing company would be attracted by this proposal because it would have the opportunity to sell some of its features through an evolving tool (Dropbox’ cloud storage), and Dropbox would gain competitive edge by providing enhanced quality for shared files. The KPI’s for this action would be a signed contract among Dropbox and Adobe and a market share increase of 2% in the first year after the partnership will be settled.
For the mental association of Dropbox with the cloud storage service, the management of the company should invest in social media research, finding experts and influencers to promote its services. Through likes, comments, twits or shares of the influencers’ contents praising Dropbox’s services, the company’s reputation should increase and the social media content and online word of mouth should capitalize into at least 1,25% of new users.

References

Kumar, V. & Shah, D. (2015) Handbook of research on customer equity in marketing. Cheltenham: Edward Elgar Publishing Limited.
Teixeira, T. & Watkins, E.A. (2014) Freemium pricing at Dropbox. Harvard: Harvard Business School.