Market Model of SaaS Company - Essay Example

There are numerous market models available for different companies to choose from in addressing the marketing aspects, however, a majority usually choose that fit in their operational programs as well as have the simplest of formats that ease the explanation and interpretation of information available (Gregoriou and Razvan 28). The choice of a particular market model for a company is usually influenced based on the five characteristics of the models used. Therefore, for every organization, the choice of a particular market model is usually influenced by the characteristics of the particular model.

Out of the four types of market models, SaaS Company operates depending on the Perfect or Pure Competition Model. This is a type of market model in which one's success is influenced by the ability to outshine the competitor on the goods produced and the services rendered. In this instance, the competitors indeed work in a similar product line, with an aspect of equal quality of the products. The market influence is, therefore, dependent upon influencing many buyers and having many suppliers for the products made for success (Gregoriou and Razvan 96).

Based on the five characteristics of the market model, each is directly aligned with the company’s market model. First is that the product is the most essential in business operations. For SaaS, there is the building of customer systems, providing the customers with the most appropriate product choices. The second characteristic is that there is a cost/ value proposition. In a business where two or more companies are producing similar products and equal in value, it is substantively important that the price be set at a lower value compared to the competitor’s value for success to be realized. SaaS, from this perspective, provides cheaper products compared to the alternatives, provides a network of benefits that are not easily found with the other competitors, and operates based on certain sophisticated technology models that are not easily imitated by the competitors to influence the customers (Gregoriou and Razvan 106).

The third characteristic is that of financing its growth by applying two crucial elements of success; negative working capital and shorter time to market. These two are very important in realizing success for enhanced competition. Negative working capital is when customers pay for products before the start of a month, year, or a specific period, before using the products. This, therefore, provides the organization with a competitive advantage by acquiring customers early. The efficient sales model is another characteristic applied by SaaS companies. In this perspective, the company can offer its customers a 12-month contract and the company makes a profit with the customer before the customer has an opportunity of changing his or her mind to a different company.

The last model characteristic is that of market leadership. SaaS is currently a market leader and therefore operates in such a manner that there is very little viable competition. To the company, sales, and marketing remain the most essential aspects for the realization of success, and hence in their operations, they work to acquire more customers from their competitors (Gregoriou and Razvan 118). Read More