Executive Summary
Having a successful, innovative product, but experiencing financial pressure, Documentum, Inc. has to choose between continuing its horizontal strategy for market penetration and a new, vertical strategy. In addition, Documentum has to decide on a pending offer from a big potential customer. We recommend that Documentum switches to vertical strategy, targeting the Pharmaceutical market segment. In addition Documentum should reject the Marsh & McLennan offer.
Analysis
When analyzing Documentum's options, we consider the psychographics of the target buyers, as well as the experience with the first two customers, Boeing and Syntex (see Appendix).
Alternative 1: Horizontal Strategy
Following this strategy, Documentum would offer a platform (toolkit) to as many market segments as possible, assuming that the market has matured for the new product. Documentum would leverage its current organizational structure. The buyers' key decision makers would be the IT professionals.
Pros
? Does not deviate from the strategy that was pitched to the VCs
? Huge target market (not restricted by the market segments boundaries)
? Marketing, sales, and R&D currently structured for horizontal strategy
? Good product architecture (toolkit), suitable for targeting IT personnel
? Less sales expenses, compared to the vertical strategy
Cons
? Technology is still in Early Adopters stage ? there's no well developed market yet
? Buying decisions are made by IT professionals, not by business process managers
? Lower profit margins, compared to the vertical strategy
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