Dropbox Inc.'s three-year marketing plan and growth strategy

¶ … Marketing Plan

Item Page

Product Description

Value proposition 3

Features and Benefits

Target market

Competitive Analysis

Strengths

Weaknesses

Opportunities

Threats

Marketing objectives

Measures

Pricing strategy

Distribution strategy

Marketing promotion

The Budget

Sales Forecast

Table 5.1.2 Marketing Expense Budget

The founders of Dropbox Inc. have formulated this three-year marketing plan with an aim of securing additional funding for growth as well as to inform potential investors, as well as existing customers of not only the service's direction but also its current status. Initiated only six years ago, Dropbox has experienced significant growth, and available data shows that the target market of corporate customers and consumers (active) aged between 25 and 45 would want to not only get involved in the Dropbox digital world, but also be assured of the security of their stored files. In addition, the company plans to explore opportunities for Android and upcoming Mac versions. The marketing environment has been significantly receptive -- connecting customers who work while on the go with those things that matter most, and using their satisfaction to source for more customers. Over the next five years, the firm will be out to introduce more features, increase its distribution, and win new customers.

1.2 Product Description

Dropbox Inc. was founded in 2007 by Arash Ferdowsi and Drew Houston as a Y combinatory start-up company. The company started with an initial customer base of 2000, but this had surged to 50 million by mid-2011 (Barrett, 2011). Dropbox is a personal cloud storage service that enables users to access personal folders stored on the internet through a mobile app, website, or installed client on different computing devices. Through Dropbox, users can work virtually with teams; add and share photos; and automatically edit documents and show off videos from anywhere. Dropbox for business secures users' content and allows team members access to files from any computing device. Currently, Dropbox customers range from individual users to local organizations and Fortune 500 companies in and beyond the U.S.

1.3 Value Preposition

Dropbox Inc. is keen on giving back to the community by, amongst other things, making the relevant contributions towards the generation of youth employment (Denney, 2014). In the very end, the company hopes to not only initiate but also fund an environmental conservation scheme, even as it enters new markets and expands its distribution. Dropbox is an efficient, resourceful, and reliable tool, saving customers a considerable amount of time and at the same time ensuring the continuous flow of business and team operations. There are numerous cloud storage solutions in the market today, but what sets Dropbox apart from the rest is its ability to allow users access to their files without an internet connection, and then automatically update the same on the online server once the device is reconnected to the internet.

1.3 Features and Benefits

Dropbox file revision functionality makes it possible for users to restore any prior revisions to their files, and hence, to roll back to the old version of any project that may have been changed inappropriately by a teammate (Dropbox, 2014). Dropbox operates three tiers of service, providing 2GB of storage space for a free account; 50-100GB for a single-user paid account; and 350GB for a Drop-box for Business account. Free and paid users, however, receive the same service functionality; and an extra 250MB of storage is advanced to all new users, regardless of their tier of service. Dropbox has substantial cross-platform capability and can be downloaded onto, and accessed from any Android device, Blackberry, iPhone, iPad, Mac, or PC (Dropbox, 2014). This is in addition to the fact that user file access does not require constant internet connection; only a working device.

2.1 Target Market

The target market for Dropbox is i) the corporate world, which loves to keep things moving, whether the supervisor is around, or a thousand miles away in a far-off country; and ii) active consumers aged between 25 and 45 -- people who love to stay in touch with their friends, sharing the latest photos, videos, jokes, and links to company information. They may not be the experts in creating the content, but they do enjoy sharing it. This target market represents a demographic group of successful, well-educated individuals, with comfortable income margins; but at the same time, high levels of price consciousness, and a tendency to seek value for purchases, regardless of where they stand on the target range. Both groups lead active lifestyles, although the 'individual' group is somewhat status oriented; its members prefer high-quality products, although they may be unwilling to pay a price premium for the same. The corporate group, on the other hand, may willingly compromise cost for quality and security. One future goal, however, is to target the less active group between ages 20 and 45.

4.2 Measures

The objectives will be reviewed twice a year to evaluate the degree of achievement. 20 million users over a span of three years translate to approximately 3.5 million new users over every review period. This objective will be measured every six months on the basis of the cumulative totals of the extra 250MB storage space often advanced to new users. Increases in collected subscription revenues will be measured every year, and trends in growth rate recorded, to be analyzed at the end of the third year. Increase in the corporate share of the corporate world will be measured using the trend in the Dropbox for business account over six review periods.

4.3 Pricing Strategy

Dropbox inc. takes competitors into consideration when determining the prices of its Dropbox service. The company is neither concerned with selling high product quantities to offset low prices, nor is it focusing on setting high prices to signal prestige or luxury. Instead, it practices value pricing so that the users of its service feel comfortable paying a little bit more for a high-quality offer. 2GB of online storage space goes for free, whereas 100, 200 and 500 GB are charged at $8.25, $16.60, and $41.60 per month. Today's consumer knows exactly what they want, and would readily sacrifice a few dollars for a comprehensive, perfectly-designed storage and sharing solution.

4.4 Distribution Strategy

As mentioned earlier on in this plan, Dropbox Inc. is wading into the B2B market as it looks to accelerate its market share beyond its massive customer base. The company operates a direct, automated sales model, which has so far worked well with customers and increased the service's sales capability. Its managers intend to maintain a direct and intensive distribution strategy to provide saturation coverage of the target market using all available outlets (any Android device, Blackberry, iPhone, iPad, Mac, or PC) (Kotler & Keller, 2006). The cloud computing industry is expanding by the day, and customers have a wide variety of acceptable brands to choose from; if one brand is not available, a customer simply picks another. Dropbox is competing against a number of established companies, and the target market is not known to walk miles in search of a preferred product when alternatives are readily available -- an intensive distribution strategy is the key to gaining market share.

4.5 Marketing Promotion

The company's promotional efforts seek to differentiate its Dropbox service from other cloud competing services offered by competitors. The company communicates with its customers and potential customers in a variety of ways. Top on the list of items to be promoted over the span of this plan is a toolkit that adds deep analytics, security, and content control to files shared through the Dropbox platform. This should provide a solution to the periodic security lapses that have limited the service's ability to attract corporate customers. Various promotional tools will be used to market the Dropbox analytics toolkit, demonstrating the service's unique qualities and at the same time building relationships.

Significantly, good public relations have followed from the company's engagement in community activities; and the company plans to build on these to market itself to the target group. Public relations and sales promotion make up almost 80% of the company's promotional strategy; during the next year, the company looks to engage in a couple of marketing efforts, including sending representatives to corporate forums to market the Dropbox for Business account. College tours will be used to get a hold of the inactive portion of the target group and distribute flyers. For the first time, advertisements will be placed on radio, television, and print magazines popular among corporate clients (the company managers have selected Forbes, after intense consultations and research). Other promotional strategies will include;

Video Explanation: the company will, in conjunction with Common Craft, develop an explainer video that will play a crucial role in the redesign of Dropbox.com, allowing a visitor at the front page to take a tour of Dropbox tools and features, familiarizing themselves with the same before signing up.

Word of Mouth Referrals: the word of mouth referral incentive program - a two-sided incentive where a user is rewarded with free 500MB storage space for inviting a friend; and the new user too receives free 500MB storage space -- has proven effective (accounting for more than half of total sign-ups in 2012) and the managers plan to retain it.

Social Media Integration: free storage space is advanced as a reward for users who post Dropbox on social media platforms -- 125MB for connecting to twitter; another 125MB for connecting to Facebook; and an additional 125MB for giving views on the 'Why You Love Dropbox Feature'.

Initiatives for User Engagement: this covers initiatives that advance free space and other prizes to users for participating in a series of puzzles. Participation often requires one to have downloaded and subscribed to Dropbox.

5.0 Budget

Table 5.0.1: Sales Forecast

FY 2014 (1000 $)

FY 2015 (1000 $)

FY 2016 (1000 $)

Sales

250,000

$300,000

$520,000

Direct Cost of sales

50,000

65,400

90,550

Net Sales Revenue

200,000

234,600

429,450

Table 5.0.2: Marketing Expense Budget

FY 2014 (1000 $)

FY 2015 (1000$)

FY 2016 (1000$)

Advertising

5,000

8,000

15,000

Social Media integration and web search optimization

80,000

110,000

150,000

Giveaways

1,500

2,500

3,000

Events

2,000

2,450

2,850

Artwork (flyer printouts and video explanation)

2,000

2,600

3,500

Research

1,500

2,200

3,000

Travel

1,500

2,000

3,000

Administration

1,000

2,000

2,900

Incidentals

1,000

Total Sales and Marketing Expenses

105,000

134,550

189,250

Percent of sales

42%

44.9%

36.4%

Contribution Margin

95,000

100,050

240,200

Contribution Margin/sales

38%

33.35%

46.19%

Dropbox Inc. plans to continue operations into the foreseeable future, increasing its market presence and building its massive customer base further.