NBPF: Value Extraction from Different Market Segments

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Topics: Baseball
NBPF: Value Extraction from Different Market Segments
Tamiko Okada entered the back office of Nippon Batting Practice Facility (NBPF) in the Northern district of Tokyo, to contemplate her fledgling company’s marketing strategy. A decorated former collegiate softball player with a graduate degree from an American university, Tamiko had a deep knowledge of the game and of her customers. She lacked a marketing background, however, so she had recently signed up for a hosted CRM service that would allow her to track the cost of acquiring and serving each of her four main customer segments, data she could use to determine which segments to target in the upcoming year.
Business Model
Unlike most batting cage facilities in the United States, Nippon Batting Practice Facility (NBPF) was open only for appointments made at least 24 hours in advance. Customers booked one or more of the eight batting cages that offered baseball and softball pitching machines for a specific period of time, typically in half-hour increments. Tamiko assigned one or more of her part-time workers–depending on the appointment–to open and supervise the facility. This not only avoided high fixed costs but also allowed NBPF to avoid hiring full-time employees, which reduced labor costs by eliminating employee benefits. Having a customer in the cage required one or two part-time workers to set up and fix any problems with the machines, retrieve and reload balls, and accept payments. The hourly workers earned an equivalent rate of ¥1,500 per customer hour in the cage.
Batting Cage Market
NBPF marketed to four main customer segments, each with its own price sensitivity, frequency of use, and attrition rate.
1. Little Leaguers: consisting of boys’ and girls’ baseball and softball players between the ages of 6 and 15, the Little Leaguers had an annual attrition rate of just 25% (i.e., 75% customer retention) because children in Japan tended to play baseball or softball throughout their youth. This core

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