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Strategy (Snapchat)

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abdulmajid alfayadh

on 2 February 2015

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Transcript of Strategy (Snapchat)

The Product
History / Timeline
Target Market
Snapchat's Strategy
Basis of Offers & Valuation

Questions & Answers
Abdullah Sindi Ahmed Rayes
Prepared For:
Professor Jenny Darouch
History / Timeline
Sep. 2011

Snapchat was introduced
App was launched on Andriod and iOS. It also introduced video snaps
Dec. 2012

Snapchat launched its new feature "Snapchat stories"
App added text conversations & video chat
Oct. 2013

Dec. 2013

May. 2014

Evan Spiegel (CEO & Co-founder) invented Snapchat initially for one of his class projects.

Snapchat Inc. was launched in 2011 by two Stanford students. The company is based out of Venice, California.

The Product
Share photos (lasts 1-10 seconds)
Share 10-second videos
Text-over-image (up to 31 characters)
Share Stories
Text Chat (Instant Messenging)
Screenshot Images (Sender notified)
Send $$ (new feature, Snapcash)
Video Chat
Discover (newest feature)
Snapchat developed an application allowing users to share picture messaging, videos, texting and to send money to a controlled list of recipients

Users basically interact with each other by sharing moments & stories everyday
Application's Uniqueness
A fast, efficient way to interact with people, and share moments/build relationships without harming the phone's memory as no content is saved (Snapchat deletes pictures/videos automatically once seen)
Snapchat added filters, timestamps, temperature, speed overlays, and ability to replay snaps
Target Market
Nov. 2014

Last month, Snapchat added a feature that allow users to transfer money to each other (SnapCash, partnership with Square)
Snapchat aims to attract young people who see the value of sharing digital media in an easy, speedy form where "deletion is the default" -- ephemeral messaging

As of Aug. 2014: Snapchat reported that it has almost 100 million monthly-active users:

Over 70% of which are females (13 - 25 age)
Snapchat's Strategy
Snapchat entered the social media industry with a new feature/function to explore a new niche within the industry

They choose to deliver one thing and one thing only -- "ephemeral content"

Although Snapchat offers already existing services (like texting & video chating), the "auto-deletion" functionality for all content is what makes it unique
Variety-Based Position
Strategic "Fit"
How does Snapchat's activities reinforce each other towards its valuble position:
Snapchat essentially serves unique needs to all. By allowing users to share digital contents from smart phones faster than any other application exist without consuming the phone's memory
In short, it's a "fun and interactive way to share daily moments where deletion is the default"
The only application where digital content is deleted automatically, once viewed
The level of interaction between activities seems to be not very sufficient and sustainable in the long-run because:
Digital functionality is not hard to come up with or imitate (data experts have even found new ways to recover deleted snaps)
Snapchat complies with law enforcements for unopened snaps
Security issues (hackers, spams and breach issues)
Basis of SnapChat Offers & Valuation

In Aug. 2014, a venture capitalist firm -- Kleiner, Perkins, Caufield, and Byers -- invested $20 million for less than 1% equity in the company, giving Snapchat $10 billion valuation.

What makes it so highly valued?
Rapid growth of Snapchat users (the $10B valuation is not based on company's revenues, but rather based on the number of users)
Snapchat does not generate revenue at the moment -- it only seeks money from investors. But in 2013, Facebook recently made an offer to purchase Snapchat for $3 billion.

To many people's surprise, CEO Evan Spiegel turned down this $3 billion offer.
Investors are attracted to Snapchat's younger age demographic (specifially, young women who are difficult-to-reach and inflential buyers/shoppers)
100 million monthly active users
nearly 1 billion daily snaps
Porter's Five Forces
Resource Based-View "RBV"
Overall Strengths & Recommendations
To increase value, Snapchat should upgrade functionalities to continue attracting young, engaged, and loyal demographic
Few Corporate Snappers - need for expansion to attract more business-users
Many ghost apps (like Save My Snaps) overriding ephemeral functionality
Security breached and issues (tighten up to avoid prior bad publicity / mistakes)
User-based value
1st mover advantage

Application value
Q & A
Jan. 2015
Full transcript