HelloWallet

4 Pages   |   2,140 Words
Question 1:

HelloWallet is marketing a product that the consumers are not keen to adopt.  It could be argued that the American consumers need a personal financial management service. Nevertheless, they are not demanding such a service. Therefore, the challenge for HelloWallet is to market the product in such a way that customers start accepting it. It might be true that the services offered by HelloWallet are highly beneficial to individuals and can greatly improve their financial situation. Still, there are a few psychological barriers that inhibit the potential customers from jumping the ship and using HelloWallet.
One of the most significant obstacles is that people are hesitant to confront their financial reality. As mentioned, 70% of the people in America live on the basis of their current income. In other words, these 70% of the people are the potential customers for HelloWallet. The situation indicates a clear opportunity for HelloWallet. HelloWallet should make an effort to make these people see beyond their fears. If these people can recognize that confronting the reality of their financial situation might actually improve the financial position, they might be more open to HelloWallet. The company should try to market itself as the tool, which can not only make people understand the mechanics of their finances but also improve their financial circumstances.
 

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Another related behavioral issue is the time that consumers spend on the HelloWallet software. The system generates results with the information that customers provide – the higher the level of detail, the better the results. Therefore, it is essential for customers to spend considerable amount of time providing details about their finances. The problem is that people don’t want to spend too much answering all the questions asked on the interface. Once again, the problem lies in the level of literacy that users have about the company’s functioning. HelloWallet has to make people realize that it is essentially necessary to provide the information for reliable results. People value to their time. If HelloWallet can show that the time spent to enter the information is well-spent, customers may be more open to spending it. One technique would be to demonstrate, through advertisements, how the entered information could enable people to spend money more reliably.

It is believe that the biggest hurdle that the company probably faces is the fears about data security. It was indeed the most prevalent concern voiced by the focus group surveys conducted by the company. Money fraud and data theft has been a prevalent problem for internet transactions. Over time, however, companies like E-bay, PayPal, and Amazon have restored confidence in online transaction. People do transactions over these companies’ online portals because they trust their websites to provide a secure medium of exchange. Recently, online banking has also seen a surge in usage as people use it for money transfers. The information requested by HelloWallet is much less detrimental than the information requested by the other mentioned companies. HelloWallet only uses the financial information to run their analysis – they cannot use the information to initiate transactions. Yet people express their fears about dispensing their sensitive information. It is very important for the company to overcome this issue as it directly inhibits the potential customers from using the service. Like those other companies, the challenge for HelloWallet is to build the confidence of their customers.
 
Question 2:
HelloWallet has a target market of people aged between 28 and 60, and earning at least $60,000 dollars a year. Since the company operates over the internet, it has an outreach to the entire country. However, it is not the only company that is offering financial management. The presence of competitors pose a challenge as the company has to capture the market from its competitors.

The main challenge for HelloWallet is that its competitors are well-established and have a method of financing their expenses without charging their customers. Mint.com and Yodlee are its two main competitors that are involved in tracking the expenditures of its customers and creating budgets. They are both well established businesses. Mint.com was only created in 2007 but it has over 1.5 million unique monthly visitors – indicating a large customer base. Yodlee was created at the advent of internet age in 1999 and has 25 million worldwide customers. Both these businesses enjoy an established line of business and a huge customer base. In addition, they do not charge anything from their customers as the companies are sponsored by financial institutions. This represents a huge challenge for HelloWallet as it will be very difficult to attract people who are already customers of these two companies. These companies are providing free services while HelloWallet is charging for the service. It will be difficult for HelloWallet to convince the existing customers to pay for a service that they are already getting for free.

On the other hand, the presence of these competitors also produces new opportunities for HelloWallet. The huge outreach of the competitors is promoting the importance of financial management among people. They are not only raising awareness about the practice but also helping to alleviate fears about information security involved with dispensing financial data. As consumers become more educated about the service, there may be an opportunity for HelloWallet to tap into the potential and attract new customers. Similarly, HelloWallet can differentiate itself from the competition by highlighting that it is not being sponsored by any financial institution. The referral fees offered by financial institution to the competitors clearly create a conflict where the client may be receiving an advice that is not in their best interests. HelloWallet, conversely, is at full liberty to explore all sorts of financial options for its clients and recommend the best approach. Moreover, HelloWallet also maintains records for small scale and local banks, while its competitors focus on large institutions. Thereby, HelloWallet has a much more comprehensive database of financial institutions, and it is more likely to generate the most appropriate and least costly solutions for its clients.

HelloWallet might also stand to gain by offering the service to employers. A relationship between employee productivity and financial distress might be a good marketing ploy to target employers. It presents a great opportunity for HelloWallet to convince the employers that the service can be a source of improving employee productivity. Each employer may have a number of employees looking to avail the service. If employers start paying for their employees financial planning, it will have a multiplier effect on the client-base of HelloWallet. Moreover, if corporate employees see the service as an effective and reliable way to manage their finances, they may want to persist with the service even after they leave their current employer.
 
Question 3:
HelloWallet is looking to offer its services through two distinct channels. The enterprise channel entails that employers offer the service to its employees as an HR benefit. The direct-to-consumer channel requires that the services are offered directly to individuals. Since the company is planning on charging a subscription fee, it will be a daunting task to attract individuals as they could get similar services from HelloWallet’s competitors free of cost. On the other hand, it seems unlikely for the competitors to exploit the enterprise channel. The competitors are associated with certain sponsors, which makes it difficult for them to hatch deals with other companies. Moreover, the service provided by competitors is already free for individuals to join – there is no need for employers to offer it to their employees.

The enterprise channel may also present more influx of customers for HelloWallet. A single enterprise would haul in many clients for HelloWallet. The company can probably benefit more if it concentrates on the enterprise channel rather than the direct consumer channel. The company can arrange presentations at different employers. The presentations should be aimed at explaining the product and explicating how the product might benefit the employee as well as the employer. The targeted organizations can include private corporations, government departments, federal unions, NGOs, and other group.

The enterprise channel can be marketed in a much more convincing way than the direct consumer channel. The study that links financial planning to productivity provides a compelling incentive for employers to encourage financial planning. The shift from employees using defined benefit plans to the use of defined contribution plans also present an added responsibility on the employers to educate employees on managing their money. On the other hand, individuals see no incentive to pay for service that they can get from competitors for free. Moreover, if the employees who try the service through direct consumer channel like the service, the employees might recommend the service to their friends. This would automatically have a positive impact on the direct consumer segment.

Nevertheless, an adequate amount of resources should also be directed towards the direct consumer channel. A more effective means of targeting would be advertising to the mass audience. The company is targeting a huge and spread-out consumer base and advertising seems to be an effective way to reach the target audience. Advertising in financial and professional magazines might be a good start to the campaign. However, the company may stand to benefit more by concentrating the enterprise channel. There exists a better rationale for enterprises to be attracted to the company’s product. Therefore, efforts should be concentrated on capturing this market.

 
Question 4:
Pricing is a sensitive issue for HelloWallet because such a product has not been previously sold on a subscription model. Their competitors are already offering the service for free. A substantial price may hamper the process of building a strong customer base. On the other hand, it is also essential to cover the cost by charging some sort of fee. The key for HelloWallet is to be able to justify the fee charged from customers. The customers should value the company’s product enough to pay for the service.

For the enterprise channel, it is easier to justify the price charged. Employers around the world are looking to improve the productivity of their employees. This is especially true for Western countries like America where the only way to compete with cheap Asian labor is to improve the productivity of its own employees. If the employers are convinced that the productivity of employees would increase from the financial management provided by HelloWallet, they might be willing to pay for it. However, in such a case the price charged should be considerably less than the benefits that employers can expect to generate from the increase in productivity. The subscription fee per each employee of the enterprise should be lower than the fee charged to individuals under the direct channel. A group discount can also be offered to the large employers. This would encourage the employers to purchase the package for their employees.

The direct consumer channel, however, is a lot more difficult to price. The two month trial might encourage people to start using the service. But the users will be willing to pay for the service after the two months only if they can determine that the product is providing a valuable service. The nature of the product suggests that two months might not be sufficient time to produce notable results. It is also understood that increasing the length of the trial period may only increase the cost for HelloWallet without attracting a considerably large number of followers. Another option that the company should consider is to provide certain basic services for free and the charge the customers for other premium services. For instance, the company can provide the basic budgeting service for. The service is already being offered by the competitors and customers may not be willing to pay for it. HelloWallet can charge for its detailed financial guidance section, which the company believes to be unique. Since such a service is not being offered by its competitors, it is much easier for the company to justify the price charged for it. Similarly, HelloWallet could include the section on ‘find better deals’ in the premium package, which can only be availed after paying a fee. Internet companies like Linked In follow this model of revenue generation and have been quite successful.

To supplement its revenues from the subscription model, HelloWallet should also explore other avenues for generating revenue. Most of the available services on the internet are usually provided for free. It will not be easy for HelloWallet to break the notion. A popular method of revenue generation on the internet is advertising. Companies like Google and Facebook have made a fortune by advertising on their website. The method involves higher risk as the company will have to build a large consumer base before it can grasp the attention of advertisers. Even so, this method present the best solution for the company as it will be able to generate sufficient revenues to easily cover their costs without charging its customers.

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