1.0 Introduction and Identification of Problems
BabbaCo, Inc. is an American based company founded by a mother of three and serial entrepreneur Jessica Nam Kim. It started off by offering infant-related products and managed to grow the business to a few hundred thousand dollars in revenue in less than a year’s time. Soon after, the young startup encountered the problem of low repeat sales. Thus, the entrepreneur started to rethink BabbaCo’s business model.
With the revamp of the product offerings, it changed to a subscription-based business model with the introduction of Babba Box. This time, the startup was caught in a dilemma of capitalizing on marketing strategies or fine-tuning the product offering before scaling. This could be attributed to the
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3.3 Fine-tone Product Offering and Widening Target Audience Group
BabbaCo may consider widening the target audience group to 3-10 years old, instead of a narrow age group between 0-5 years old (Exhibit 2). It fits better to the educational purpose of Babba Box. They could then expand their product lines and to penetrate a bigger market especially with new competitors surfacing.
Evaluation and Conclusion
From a lean startup perspective, BabbaCo should not scale its business until its business model is validated. However, BabbaCo’s business model is based on a strong network effect which falls to the winner-take-all industries.
Therefore, upon weighing the pros and cons of the recommendations, BabbaCo. may want to consider the short-term strategy as the immediate action to increase repeat sales. They should validate their business model as soon as possible to scale their business to be the market leader through extending product lines and penetrating a widening market.