Everyday investment company Sharesies was launched in February 2017, after conducting research on New Zealanders’ attitudes towards investing. Prior to launching the company, the co-founders interviewed over 200 people asking them “If I gave you $50 right now, and you had to do something with it in the next 5 minutes what would you do?” Only 5 out of 200 people chose an option to save or invest the $50. More popular options were bills, online shopping, coffees, vouchers, food, cigarettes, and beers. Yet all people interviewed said they want to invest.
Investing is different from saving. Investing essentially means giving your money to a company, or other entity, in the hope they provide you with more money in the future. Investing is riskier than saving money. Savings are sometimes guaranteed but investments are not. Investments can go up or down. But if you were to keep your money under the mattress and not invest — you'd never have more money than what you've put away yourself.
The typical kiwi investing story is largely focused on ‘getting on the property ladder’. Saving enough for a deposit for your own home, and then investing in a second ‘rental’ property once you’ve knocked off a bigger chunk of the mortgage. But, with property prices rising home ownership is becoming less attainable.
Most people would choose to spend their money rather than put that $50 towards house savings—because home ownership just feels too far away. But without an alternative way to invest their money, people are struggling to get ahead.
There are investment options available, but they are not accessible to people who do not know anything about investing. Only 25% of people spoken with said they knew where to go to start investing beyond owning a property.
They also feel like they need a lot of money to get started, need to know more, and there are just too many hoops to jump before they can get started. Traditional investment firms are focused on ‘wealth management’ not ‘wealth development’. In other words, traditional investment firms focus on people who already have wealth.
Sharesies aims to make investing in shares easy—by breaking down the current barriers that stand in the way of investing today. Sharesies wants to provide someone with $50 the same investment opportunities as someone with $50,000.
In 2018, Sharesies joined forces with Smartshares to conduct more research to understand New Zealanders’ attitudes towards investing. With the help of Colmar Brunton, they interviewed 1000 people from around the country to learn more about how Kiwis spend, save, and invest their money.
The results showed that overall, Kiwis feel good about the basics; the majority said that they feel confident managing their money (69%), in control of their spending (71%), and plan for the future (73%). However, not everyone feels they have enough money to live the life they want (35%).
Among the Kiwis interviewed, the most common form of savings was through a savings account at a bank (72%). The most common form of investments was Kiwisaver (65%) and owning your own home (59%).
When it comes to investing in shares, the survey results suggest that New Zealand is lagging behind other countries. 2 in 5 Australians and half of all Americans own shares, but only 1 in 5 Kiwis own shares—in fact, 4% of Kiwis do not have investments at all, and are not planning on getting any investments in the next 5 years.
When asked about investing, the key areas of concern that people had were around knowledge, cost, and risk.
Only 35% said that they understand how investing works. 62% agreed that investing in shares is risky—and half said that investing in shares is riskier than investing in property! While 39% of people agreed that investing in shares is a good way to grow your money, only 22% said that it is a good thing to do no matter how much money you have.
Looking specifically at non-investors, the main reasons for not investing in shares was not having the cash to spare (36%), not knowing how to invest (34%), and the belief that investing in shares is risky (31%).
Knowledge is power, and those who feel knowledgeable about the share market are more likely to own shares. Based on the survey results, this group consists primarily of males, Aucklanders, and those over 60. Sharesies aims to change this and they seem to be successful. 80% of the investors on Sharesies are under the age of 40 and are evenly split between men and women.
Product and Price
Sharesies is a Wellington-based investment platform.
There is no minimum Investments—you can invest from as little as 1 cent into any fund or NZX-listed company. Investors manage their portfolio via the Sharesies website and/or the app.
Sharesies has an auto-invest feature that lets you set-and-forget investments into a Global, Responsible, or DIY order. There is also an order suited to kids, only available via a Kids Account.
From the perspective of user experience, Sharesies goes beyond all expectations and delivers a friendly platform that is rich in design while making investments easy.
Sharesies customers can choose to pay their subscription monthly or annually. The first month is free.
Table 1. Monthly subscription pricing
$50 or less
$50 to $3000
$1.50 a month
$3 a month
For customers looking to invest more than $3000 in one year, an annual subscription of $30 a year is recommended.
The monthly/annual fees make it less competitive than other platforms, meaning $18 per year on a $500 balance is a high price to pay. Understandably, as balances increase, the annual fee as a percentage of investment balance falls.
At the end of 2019, Sharesies had 86k customers, and $157 million invested through the platform.
Sharesies co-founders have no desire for it to slow. "There's this perception that the minimum investing you need to get started is in the tens of thousands if not hundreds of thousands," Roberts says.
"The majority of financial institutions only really target the wealthy few, the democratising of investing hasn't happened in New Zealand and that's why we created Sharesies."
"What they have done is create an application for young people and old people to be able to invest just like it would be if you were checking out through an e-commerce store," Marshall says.
"It's a really consumer-friendly way to start investing."
Sharesies is best suited for: Anyone looking to start building up an investment portfolio who is comfortable paying a $30/year annual subscription fee. With no minimum investment, members have access to a wide range of funds. While competitors InvestNow and Smartshares offer a range of funds with no annual subscription fee, Sharesies is by far the most flexible in terms of investment opportunities.
Because of the low transaction fees and large number of funds available, Sharesies offers something for everyone. The original target market was under 40 and small-scale investors, the average investment balance is now well over $1,000. Furthermore, the app and website is a step above other platforms like InvestNow and SmartShares, letting customers keep close track of individual investment performance.
The key reasons why people don’t invest are: they don’t know where to go or how to get started, they don’t know what to invest in, and they think they need a bunch of money up front.
Sharesies is focused on educating consumers and simplifying investing. They do this in variety of ways. For instance, through the language they use and by having an approachable brand and an intuitive product. Because there is no minimum investment, people can start small and increase their investments as they build their confidence.
In addition to this, Sharesies educates their customers on basic investment principles through regular blog posts on their website. These blogs explain for instance what terms like ‘dividends, ‘volatility’ and ‘diversification’ mean.
A certified B-Corp
Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.
Society’s most challenging problems cannot be solved by government and non-profits alone. The B Corp community works toward reduced inequality, lower levels of poverty, a healthier environment, stronger communities, and the creation of more high quality jobs with dignity and purpose. By harnessing the power of business, B Corps use profits and growth as a means to a greater end: positive impact for their employees, communities, and the environment.
The certification puts businesses ahead that are truly good in all areas. Well known international companies like Patagonia, Ben & Jerry’s and Allbirds are B Corps. As of April 2019, Sharesies is the first financial company to take the B Corp certification in New Zealand.
Research by consumer website Boring Money found that women are less likely to invest than men, with only two in 10 (21%) aged 40 to 55 holding money in the stock market compared to over a third (34%) of men in the same age bracket. That said, Boring Money found similar numbers of men and women want investing to be simple – 14% of men and 14% of women want a simple ready-made option from the organisation they’re using to help them invest, while 12% of men and 13% of women want a shortlist of investments to choose from.
The investment gap between men and women also narrows when it comes to the younger generation, with 45% of women under 25 having no savings or investments and 40% of men in this age group saying the same.
Sharesies believe that investing should be accessible to everyone and want to help more women feel empowered to make the most of their investing. They further note that investing is important because of several factors that have an impact on women’s finances:
Question 1: Market Research. 30 marks - suggested maximum 500 words / 1 page
Sharesies has conducted multiple studies in order to understand New Zealanders’ attitudes towards investing.
1a) Is the research conducted by Sharesies described in the case an example of primary or secondary data collection? Explain why. (6 marks)
The research conducted by Sharesies Company was both primary and secondary in two different scenarios. The study that was conducted in 2018 with the help of Colmar Brunton, was a primary research wherein Sharesies interviewed 1000 individuals from around New Zealand to learn more about how the nation’s residents spend, save, and invest their money. It was the entirely primary research as the company collected the first hand information via the interview method (Johnston, 2017). The target population was taken to be 1000 people for getting the responses to the specific questions that the company wanted data on, and that indicated the usage of primary data collection.
Furthermore, the research conducted by company via using the Boring Money Company’s website, represents an example of secondary data collection. It is so because it has been collected via already existing information on the company’s website and hence a secondary source (Choy, 2014). It would appear that they have presented statistics on investing behaviors between men and women, giving them a marketing opportunity to encourage women to invest, thus expanding into a new market.
1b) Is the 2018 research conducted in collaboration with Smartshares and Colmar Brunton exploratory, descriptive, or causal in nature? Provide an explanation for your choice. (6 marks)
The 2018 study done in collaboration with Colmar Brunton and Smartshares was definitely an exploratory one. It is due the fact that the Sharesies Company wanted to have a better understanding of the existing issue however; will not attain conclusive outcomes. Moreover, exploratory study refers to the procedure of inspecting a problem that has not been measured in the past and not having many evidences. Furthermore, this research design helps in generating the familiar problem more exactly and precisely along with vigorous insights, and expectations development surveyed by case studies, surveys, interviews, and more. This research design has been used by Sharesies Company so that it can collect behavioural along with the attitudinal data from the respondents about their behavior towards investing options (Ponelis, 2015). By revealing the data, they can suggest hypotheses, headlining with ‘knowledge is power.’ This uncovers a need, which Sharesies can supply the support to empower more people to feel confident about their money.
1c) How do the results from their market research help Sharesies make decisions about their Product and Price? (10 marks)
The results of market research assist the Sharesies Company to make decisions regarding their product and price. It is so because the market research helps the company to solve the problems and decrease the risk of making essential business decisions about their product and price. The results of market study reflect the consumer behavior towards investment options (Tarka, 2018). It shows the percentage of consumers who perceive investment in shares to be risky. Some perceive that it will require substantial knowledge, and costs. Sharesies has designed its pricing of different products for the diverse people. Their research results define the concerns people have around knowledge, cost, and risk. The prices debug these concerns as they offer consumers their knowledge, a low cost, and can define the risks associated to investing
1d) Give one disadvantage of primary data, and one disadvantage of secondary data.
The primary data collection has certain limitations, one of which could be time-consuming method of collection data for a particular study. It is so because researcher may take time to search for the target population. It may also be possible that individuals are reluctant to engage in the instant interviews or any survey. Therefore, it can be said that due to the exhaustive nature of the task, the time needed to conduct research precisely is extremely lengthy when compared with secondary study (Alshenqeeti, 2014).
The disadvantage of collection secondary data is that it may lead to inappropriateness of data. It may provide a company with massive amount of information, however; quantity is not identical of correctness. Furthermore, this kind of study may not offer the exact data a scholar is looking for (Cole & Trinh, 2017).
Question 2: Buying behaviour. 30 marks - suggested maximum 500 words / 1 page
Consumer buyer behaviour is influenced by four key sets of buyer characteristics: cultural, social, personal, and psychological.
2a) Describe two personal characteristics that could influence the buying behaviour of Sharesies potential and current customers. Please explain how these characteristics may influence buying behaviour. (14 marks)
The two personal characteristics that may influence the buying behavior of Sharesies potential and current clients are as follows:
2b) The first step in the buyer decision process is ‘need recognition’. Give an example of a need that a potential customer of Sharesies might recognise and wants to fulfil through investing with Sharesies? (8 marks)
Need Recognition is the chief and leading phase of the buyer decision-making process that facilitates buyers to recognize what the necessity is and subsequently, what kind of product can meet the need recognized. It is reflected to be the most critical stage of this process as without recognizing the precise need, the clients cannot choose on the product acquisition. Need is the dynamic factor that results in the purchasing of goods and services. This can be triggered by internal or external encouragements. Interior incentives mean the individual belief experienced by consumer while exterior stimuli refers to the external motivations like word-of-mouth (Oke et al., 2016).
The need that a prospective consumer of Sharesies can recognize might be for a product that can offer wealth development benefits after a certain time period. This stimulus can trigger the need for investing in shares for getting attractive returns out of their entire investment.
2c) The final step in the buyer decision process is ‘post-purchase behaviour’. At this stage, cognitive dissonance, or discomfort caused by post-purchase conflict, might arise. What could be a potential source of cognitive dissonance for Sharesies’ customers? (8 marks)
Subsequently the purchase of a product, there originates a stage called as post-purchase behavior that indicates to the examination of customers on whether the merchandise was valued to him or not, whether it has fulfilled his needs or not. Moreover, this is the last stage in the process of consumer buying decision making (Qazzafi, 2019). Post decision dissonance is the sense about the vagueness of precise decision and that may make a state of conflict for the customer. The possible source of this kind of conflicting situation may arise from the advertisement by identical company demonstrating the higher quality and benefits of their products that are lagging in the product they brought from Sharesies. The strategy that can reduce this discomfort feeling is the acquisition of supplementary information from numerous sources like experts (Sharma, 2014).
Question 3: Customer-driven marketing strategy. 40 marks - suggested maximum 750 words / 1-1.5 page
The first step in designing a customer-driven marketing strategy is selecting which customers to serve. The case described the original target market, namely those under 40 and small-scale investors, but suggests that Sharesies actual customer base is broader.
3a) Please describe two possible consumer segments that Sharesies might be targeting or could target. (15 marks)
The two possible consumer segments that Sharesies Company might be targeting are as follows:
Age and life-cycle segmentation: It is noteworthy that client’s needs and desires change with age. This is the segmentation strategy that divides prospective clients into numerous groups on the basis of their situations in life and their ages and plans diverse campaigns for each one. As for instance, given a good that entices both to older generation and younger generation, an age and life-cycle segmentation may utilize diverse approaches for both age groups (Sung, Chang & Sung, 2016). Moreover, this company might plan its products as risky one or carrying higher returns with more risk for the younger generation people. Besides, it may design less risky products that carry less returns and less risk for the older people. Sharesies can divide the market as below 18, between 19 and 40, and above 40 in terms of ages.
Income Segmentation: This is another means of segmenting the market of Sharesies products. It indicates to dividing the market into diverse income segments as low-income, middle-income, and high-income. It is extremely essential as it is an approach via which company can comprehend the requirements of clients and to create their lifestyle better. Sharesies must have products for all the income groups. It means that the people with less income can also be able to buy the company’s product along with the middle-income and high-income people (Goneos-Malka, Strasheim & Grobler, 2014).
3b) Now describe whether the two segments you described in 3a are accessible and differentiable. Please provide an explanation for your evaluation. (10 marks)
A segment is said to be valid when it adheres to a criteria that is measurable, substantial, differentiable, actionable, and accessible. Indeed, the age and life-cycle segmentation; and income segmentation are both accessible and differentiable. The marketing strategy to be used will be different for each segment as per their individual needs (Wolf et al., 2018). For example one particular segment of Sharesies is comfortable or best reached mobile applications, and other segments might be resistant to technology and depend over the newspaper marketing. Therefore, in this respect, Sharesies segments are formed by taking the desires of every individual group and hence the income segments and age segments are both accessible. Furthermore, all the segments taken by Sharesies react differently to the identical marketing mix and hence these are differentiable too. It is so because the income segments will have different perceptions about price of product when compared with the age group-segments.
3c) What kind of targeting strategy would you suggest best suits Sharesies: Is it undifferentiated (mass) marketing, differentiated (segmented) marketing, concentrated (niche) marketing, or micromarketing? Please explain your choice. (15 marks)
Market targeting is the concept that can be defined as the procedure of accessing and choosing the market segment. It is concentrated on appraising the existing division’s attractiveness and chooses one or more divisions to serve (Lei & Moon, 2015).
The targeting strategy that can be best suited for Sharesies Company is the niche or concentrated marketing. It is a kind of approach that targets just one or a few definite segments of the buyer population. The main purpose of this strategy is to attain a higher penetration among the narrowly defined target systems. Furthermore, with this tactic, Sharesies is able to attain a robust market position in the selected segment as its information of the client needs in the niche is larger. Additionally, it may attain distinctive reputation for distributing exactly what the customer needs in that niche. It will be more profitable for company to meet the needs of some specific market segments rather than spreading resources over numerous diverse segments.
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