NEW YORK, Sept 15 (Reuters) - Marketing automation firm Klaviyo Inc is in advanced discussions to raise the indicative price range of its initial public offering (IPO), people familiar with the matter said on Friday, as strong investor demand emboldens stock market hopefuls.

Klaviyo, which is seeking an $8 billion fully diluted valuation at the midpoint of its $25-$27 range, is in talks with its IPO underwriters about raising that range, the sources said. A final decision on the matter is expected over the weekend, the sources added.

The IPO, which is scheduled to price on Tuesday, is nearly 20 times oversubscribed because of the investor demand, according to the sources.

The sources cautioned that the deliberations were ongoing and asked not to be identified because the matter is confidential. Klaviyo declined to comment.

Klaviyo is the latest company to seek to raise its IPO price range. Grocery delivery app Instacart, which is also going public next week, raised its IPO price range on Friday to target a fully-diluted valuation of up to $10 billion.

A rally in the shares of Arm Holdings Plc this week has lifted market spirits. The chip designer floated on Nasdaq on Thursday at a $54.5 billion valuation and is now worth $65 billion, on a fully diluted basis.

Grocery delivery app Instacart, which is also going public next week, raised its IPO price range on Friday to seek a fully-diluted valuation of up to $10 billion.

Klaviyo has already lined up major asset managers as investors in its IPO. BlackRock Inc and AllianceBernstein LP have indicated an interest in buying up to $100 million worth of shares each, according to a regulatory filing.

Klaviyo, founded in 2012 by software engineers Andrew Bialecki and Ed Hallen, helps store and analyze data for e-commerce brands that enables them to send out personalized marketing emails and messages to potential customers.

Klaviyo counts over 100,000 businesses in more than 80 countries as customers. (Reporting by Echo Wang and Anirban Sen in New York; editing by Diane Craft)