Market Segmentation, Forecast, Trends and Customer Needs of Venmo

This article discusses the market segmentation of Venmo based on age, geography, and demography. It also provides a market forecast for Venmo and discusses the trends in the ecommerce industry. The article also highlights the needs of Venmo's customers and its sales goals.

2.1 Market Segments (Chapter 9) – 5 pts.
Education Level
Age Student Graduate Post Graduate Self-Employed
21-30 North America Mid-America
31-50 South America
50-65 South America
>65 Business
One can segment the market of Venmo on the ground of geography and demography.
The main age group using Venmo, which is a mobile application consist of people aged
between sixteen and thirty five. They consist of students and young professionals who mostly
use online services for transferring money to each other. It can also be pointed out that
Venmo enables online payment for purchases which again is more prevalent among the city
and town consumers1.
The second segmentation of Venmo’s customer base consist of people residing in the
cities and towns. This is payment application is dependent on presence of internet which is
more easily available in the cities and towns.
The third market segmentation of the market of Venmo consist of professionals and
students who socialize a lot. These customers often avail products like food services at
restaurants which require them to split the bills among themselves. They split the bills and
send money online. The same is applicable for young professionals who socialize and require
to split expenses.
The fourth customer segment of Venmo consist of business organizations which use
its services to receive their payments. Thus, the customer segment of Venmo consist of both
individual and business customers.
2.2 Market Forecast (US $): 2015 – 2020 (Chapter 3) – 3 pts.
The market forecast of Venmo shows strong sign of it one of the most sought after
new generation cashless peer to peer payment system. The application was initial a peer to
peer payment version of PayPal, its mother company. PayPal then enabled online payment
for purchases through Venmo which made online shopping easier. Moreover, it is paperless
and saves people from going to ATMs to withdraw cash to make payment2. This saved them
from paying the ATM charges and thus, added value to their usage of it. These factors are
laeding to rapid increase in the market share of Venmo. However, the app is facing increasing
competition from companies which are far bigger than it in term of market position3.
Companies like Amazon, Apple and Google have their own online payment systems against
which Venmo stands little chance as a competitor4. Thus, considering its increasing market
1 Akter, Shahriar, and Samuel Fosso Wamba. "Big data analytics in E-commerce: a systematic review and
agenda for future research." Electronic Markets 26, no. 2 (2016): 173-194.
2 Koren, James. 2018. "As Millennials 'Venmo' Each Other Money, Banks Fight Back With Their Own Mobile
Apps". Latimes.Com. http://www.latimes.com/business/la-fi-agenda-p2p-20170327-story.html.
3 Liébana-Cabanillas, F., Muñoz-Leiva, F. and Sánchez-Fernández, J., 2015. Behavioral Model of Younger Users
in M-Payment Systems. Journal of Organizational Computing and Electronic Commerce, 25(2), pp.169-190.
4 Soper, More. 2018. "Paypal Gets Boost From Stores Looking To Compete With Amazon". Bloomberg.Com.
https://www.bloomberg.com/news/articles/2017-10-19/paypal-boosts-revenue-outlook-on-expanded-
shopper-activity.

share but presence of competitors like Amazon, one can forecast that Venmo should adopt
techniques like niche market to expand its market5.
Note: It has been assumed that the growth would be 20 percent in the table below on all
segment and the basic prices in the template have been retained.
CAGR 2015 2016 2017 2018 2019 2020
Segmen
t 1 20% $2 $2.40 $2.88 $9.79 $33.29 $359.30
Segmen
t 2 20% $2 $2.40 $2.88 $9.79 $33.29 $359.30
Segmen
t 3 20% $2 $2.40 $2.88 $9.79 $33.29 $359.30
All
Other 20% $3 $3.60 $4.32 $19.87 $91.41 $1,907.93
Total 100% $9 $11.31 $14.23 $17.95 $22.61 $28.50
2.3 Trends (Chapter 3) – 2 pts.
The market trends consisting of increase in the use of ecommerce payment platforms
and online purchase show positive signs for payment applications like Venmo. the consumers
today increasingly prefer making online payments to friends and acquaintances instead of
giving cash. The retail market is showing tremendous growth with new and innovative
products available to consumers. The global retail industry which accounts for the bulk of the
businesses of the ecommerce companies is expanding very fast. Markets like Asia are
experiencing fast growth with more people preferring online payments. These trends are
leading to fast growth of the payment gateway applications like Venmo6.
The latest trend is that consumers prefer making payments online instead of
withdrawing cash from ATMs to make payments. Moreover, availability of payment of utility
bills online through smart phone applications have made online payment more rampant. One
can analyse that Venmo can take advantage of these two trends to boost its business7.
The next trend in the online payment industry is global expansion of the ecommerce
companies. The leading online payment gateways are owned by leading internet and
information technology gaints like Amazon and Google. These operate gateways all over the
globe spanning from North America to Asia. This is where smaller payment gateway app
owners like Venmo loses out to these giants. The applications like Venmo are not available
outside the US which limits the payment opportunities of the users. This factors repels them
and the company loses consumers to more powerful rivals like Google8.
5 Strauss, Judy, and Raymond D. Frost. E-marketing: Instructor's Review Copy. Routledge, 2016.
6 Liébana-Cabanillas, Francisco, Juan Sánchez-Fernández, and Francisco Muñoz-Leiva. "Antecedents of the
adoption of the new mobile payment systems: The moderating effect of age." Computers in Human
Behavior 35 (2014): 464-478.
7 Venmo Purchases". 2018. Venmo.Com. https://venmo.com/purchases.
8 Ozturk, Ahmet Bulent, Anil Bilgihan, Khaldoon Nusair, and Fevzi Okumus. "What keeps the mobile hotel
booking users loyal? Investigating the roles of self-efficacy, compatibility, perceived ease of use, and perceived
convenience." International Journal of Information Management 36, no. 6 (2016): 1350-1359.

2.4 Customer Needs (Chapter 15)– 3 pts.
The needs of the customers using payment gateways like Venmo consist of flexibility
and clarify. the customers also expect these companies to provide security of high level for
the payments they make.
6.4.2 Sales Goals (Chapter 3) – 2 pts.
The sales goal of venom should be increase in market share compared to its tough
competitors like Amazon. The company should also expand into markets outside the
American shores like Europe and Asia9. The projected sales goal of Venmo is set at $ 1
trillion by 2019 considering the growing market of mobile payments and stiff competition
from rivals like Google10
Number
of
quarters
2018 Q3
166,666,666,666.67
6 2018 Q4 166,666,666,666.67
2019 Q1 166,666,666,666.67
2019 Q2 166,666,666,666.67
2019 Q3 166,666,666,666.67
2019 Q4 166,666,666,666.67
2019 end 1,000,000,000,000.00
Note:
It has been assumed that the sales figure would
evenly be distributed from 2018 Q3.
9 Chen, Daniel L., and John J. Horton. "Research note—Are online labor markets spot markets for tasks? A field
experiment on the behavioral response to wage cuts." Information Systems Research 27, no. 2 (2016): 403-
423.
10 Sanicola, Laura. 2018. "Square's New Strategy Is Paying Off. Its Stock Is Up 175% This Year". Cnnmoney.
http://money.cnn.com/2017/11/09/news/companies/square/index.html.

References:
Chen, Daniel L., and John J. Horton. "Research note—Are online labor markets spot markets
for tasks? A field experiment on the behavioral response to wage cuts." Information
Systems Research 27, no. 2 (2016): 403-423.
Koren, James. 2018. "As Millennials 'Venmo' Each Other Money, Banks Fight Back With Their
Own Mobile Apps". Latimes.Com. http://www.latimes.com/business/la-fi-agenda-p2p-
20170327-story.html.
Liébana-Cabanillas, F., Muñoz-Leiva, F. and Sánchez-Fernández, J., 2015. Behavioral Model
of Younger Users in M-Payment Systems. Journal of Organizational Computing and
Electronic Commerce, 25(2), pp.169-190.
Liébana-Cabanillas, Francisco, Juan Sánchez-Fernández, and Francisco Muñoz-Leiva.
"Antecedents of the adoption of the new mobile payment systems: The moderating effect
of age." Computers in Human Behavior 35 (2014): 464-478.
Ozturk, Ahmet Bulent, Anil Bilgihan, Khaldoon Nusair, and Fevzi Okumus. "What keeps the
mobile hotel booking users loyal? Investigating the roles of self-efficacy, compatibility,
perceived ease of use, and perceived convenience." International Journal of Information
Management 36, no. 6 (2016): 1350-1359.
Sanicola, Laura. 2018. "Square's New Strategy Is Paying Off. Its Stock Is Up 175% This
Year". Cnnmoney. http://money.cnn.com/2017/11/09/news/companies/square/index.html.
Soper, More. 2018. "Paypal Gets Boost From Stores Looking To Compete With
Amazon". Bloomberg.Com. https://www.bloomberg.com/news/articles/2017-10-19/paypal-
boosts-revenue-outlook-on-expanded-shopper-activity.
Strauss, Judy, and Raymond D. Frost. E-marketing: Instructor's Review Copy. Routledge,
2016.
Venmo Purchases". 2018. Venmo.Com. https://venmo.com/purchases.