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Strategic Marketing Management: Facebook

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Dethie Dieng

on 10 February 2014

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Transcript of Strategic Marketing Management: Facebook

Seminar 1: Purpose of the organisation
Seminar 2: Analysis of the internal marketing environment
Seminar 3: Analysis of the external marketing environment
Seminar 4: Developing, selecting and implementing marketing strategy

FACEBOOK'S COMPETITION
Founded on February 2004
Co-Founder: Mark Zuckerberg
Around 1.19 bn users

Services offered:
Facebook messenger
Comment & content sharing
Like
Facebook platform (apps and games development)
Opengraph
Online advertisement
Business pages

Facebook's mission statement:
Facebook's mission is to give people the power to share and make the world more open and connected
Facebook acquires Onavo for $120M
12 October 2013
facebook
Mission's evaluation
Mission statement
Vision statement
Vision Statement
People use Facebook to
stay connected with friends
and
family
, to
discover what’s going on in the world
, and to

share
and
express what matters to them
Mission Statement
Facebook's mission is to give
people
the
power to share
and
make the world more open
and
connected
Locations
1601 Willow Road, Menlo Park, CA 94205, United States
355 Madison Avenue, New York, New York 10017, United States
Contact Information
Phone: +1-650-543-4800
e-mail: info@facebook.com
Culture
Marketing Mix
Product
Gaming and apps platform
Business pages
Advertisement
Messaging
Sharing content (e.g. Videos, pictures, information)
Opengraph
Networking
Price
Free to create an account and use
Free to play social games
Paid per advertisement
Paid per gaming/apps extras
Sponsored posts
Place
Online:
PCs, Mac
Mobile platforms (e.g. smartphones, tablets, TVs)
Promotion
Earned adverts (e.g. Word of mouth, Third-party website, etc.)
Owned adverts
2 branches (1 profitable & 1 non profitable)
Emergent:
Slowly emerging from small background led by a few but headed by Mark Zuckerberg
Prospector:
Taking risks and finding new opportunities within the market (Miles and Snow 1978)
Task Culture:
Geared to tackle identified projects and task
Clan Culture:
Working together as a team being open and communicating. (Cameron and Quinn 1999)
Facebook's culture timeline
Start-up inspired by Mark Zuckerberg
Innovative:
The Hacker Way
Move Fast
Be bold
Be open
Build social value
Focus on impact

facebook
facebook
Facebook's stakeholder analysis
Minimal effort
Maintenance staffs
Internet browsers
Keep informed
Employees (e.g. marketing & Finance team, etc)
Government
Keep satisfied
Shareholders / Financial Community
Third-party websites / developers
Key Players
Mark Zuckerberg
Employees (e.g. executive team, engineers, code writers, etc.)
Advertisement companies
Initial Investors
Internal Stakeholder analysis
Segmentation
Why do people use Facebook
2 Facebook personas
Consumer behaviour
Why do people use Facebook?
Facebook users persona
Competitive advantage
Differentiation
Cost Leadership/Differentiation
Focus
“People the power to share and become more open”
Providing best service for social networking users/consumers
Providing social networking hub for businesses to obtain consumer information
Innovation

B2B
• Advertising Space
• Database/Consumer Info
• Facebook Platform (Zyga)
B2C
• Able to log into other services & apps via Facebook
• Social Gaming
• Adapted timeline to share users lifetime instead of daily activity
• Customisation
• “Sponsored Posts”
B2C
Cost Leadership
Free service to consumers to sign up
Differentiation
Possibility of premiums (Games/apps),
“Sponsored posts” $7,
IPO
B2B
Cost Leadership
Facebook for Websites,
Facebook Platform,
OpenGraph,
Flashcache (database)
Differentiation
Advertising (Promoted posts $500),
Log out screen ($700k),
Social Gaming (30%),
Graph Search
Key to showing value creation and loss
Key Sections
The Wider Chain
Key to internal audit
The Value Chain
Critical Success Factors
Facebook's corporate values
Seminar 1: Purpose of the organisation
Seminar 2: Analysis of the internal marketing environment
Seminar 3: Analysis of the external marketing environment
Seminar 4: Developing, selecting and implementing marketing strategy
Maslow's hierarchy of needs
The Loyalty matrix
Jane Doe
Mother
Age: 40 years old
Has 198 friends
Logs into Facebook 4 times during the day
Spends in average 6h/week on Facebook
Plays social games mainly on mobile devices (e.g. on mobile phone in the transport and on the tablet at home)
Shares 34% of her online content through Facebook: 21 status update per month and a new profile photo every 2 weeks
She is very concerned about the privacy of her personal information
John Doe
Male
Age 25 years
Waiter
Logs in Facebook daily
Spends in average 11h/week on Facebook and is fan of one brand at least
Has 319 friends including 16 coworkers
Only access Facebook through mobile devices
Checks Facebook right when he wakes up
Uses Facebook to communicate with friends, express his feelings,find out the news and explore brands
Gets influenced for his purchase by the existence of a Facebook page and mobile website
Facebook's platform
Opengraph
Development of their mobile platform to match consumer behaviour
Facebook Analytics to retain businesses and increase revenues related to advertisement
Curent Critical success Factors
Future Critical success factors
Acquisition of Onavo
Privacy settings
Market Structure Analysis
Comment
Gaming
Advertisement
Facebook platform
Tagging
:Monopoly (Brand)
: Oligopoly
: Highly Competitive
facebook
Industry/Product Life Cycle
Macro environmental analysis
PEST Analysis
Political
Privacy policies
Economic
Internet advertisement a growing sector and forecast to carry on growing
IPO
Social
Use of multiple platforms to go online:
50% of smartphones ownership
11% of tablets ownership
Technological
Google entrance in social media industry
Purchase of start-up Onavo
Competitive environment
Competition among existing Firms
Main competitors (similar services):
Google, Twitter
(both trying to grow)
High competition for niche markets and low level of differentiation
Low fixed cost initially
Threat of substitute products
Threat of potential entrants
Bargaining power of suppliers
Bargaining power of customers
Up-to-date technologies
Identifying consumer behaviour trends
Strong brand loyalty
Others
Low barriers to entry for competition for niche markets
Profit organisation
Buyer concentration higher than firm concentration
Few substitute products
Self developed service provided on own platform
Non-profit part
Higher firm concentration
Little differentiation in terms of product
No cost for buyers to switch
High supplier concentration
No differentiation of inputs
Small switching cost
Fast-moving industry (technological advancement)
High and increasing competition for niche markets
Facebook own expansion
Competitive positioning
1.19bn
232m
259m
350m
70m
200m
540m Google / 1bn Youtube
5m
Competitive analysis & profiling
facebook
Today
Upcoming
Current culture:
Prospector/Analyser. Clan. Money Driven.
Defender. Money Driven. Might lose Clan.
Facebook's current strategy
Becoming established worldwide
Producing new innovating services
Increasing presence in mobile platforms
Gaining/maintaining competitive advantage
Retain consumer's activity/connectivity
Increase their website footprint
Growth/Shake-out
Global Take over
Market development
Product development
Market penetration
Defence
Factors influencing the strategy
Consolidate market leader’s position
Generate more revenues
IPO
Revenues from previous years generating free cash flow to finance new projects

Organisation’s culture: The Hacker Way
Previous attempt with HTC
Failure might increase the rate of people leaving Facebook

Oligopolistic market
Industry presents a mix of “Market pull” and “Technology push” features
Online advertisement a growing market (nearly 15% increase in 2012)
VoIP a growing market (around 150m users and a growth of 2.4% in Q1 2013)

Main competitors: frontal attack to gain market share and take over market leader position
Market nicher: submarine attacks

Facebook's marketing strategy
Organisational objectives and resources
Attitude to change and risk
Market structure and opportunities
Competitor strategies
TOWS Matrix
The limitations of the mobile platforms have lead to some loss in terms of users’ activity and advertisement revenue. Therefore to counter this problem an improvement of the mobile platform would help increase both the engagement of the customers and the advertisement investments. This will also give them the opportunity to gain new customers with an improved mobile platform.

Due to the threat that Google presents, Facebook has to make sure that they match what Google offers to avoid losing more market share. The first step would be the free calls through Facebook. With the acquisition of Onavo they could compress the data and make it worthier to place Voice over Internet Protocal (VoIP) calls through Facebook than any other software; VoIP being a growing market.

With Google’s threat and the difference in terms of performances between Google Analytics and Facebook Analytics, Facebook has to improve its analytics to generate more attraction through their platform for businesses. A better analytics platform would make it easier for businesses to analyse the data received from Facebook and might lead to an increased retention rate of advertisement consumers.

The social media being at a shakeout stage, an expansion to China would help them attract new customers. Also due to the amount of Chinese population and the Chinese’s economy situation it would make them more attractive to businesses trying to penetrate that market as well.

Brand image
Variety of products
Amount of information on customers
Number of Facebook accounts
Market leader
Management style
Decrease in engagement
Privacy regulations
Mobile platform
Strengths
Weaknesses
Increase of number of mobile internet users
(
I
/
IV
)
Expansion into new market (e.g. China) (II)
Creation of online marketplace (II)
Diversify source of revenue (III)
Lost of the Hacker Way (IV)
Users using ad-block extensions (II)
Identity theft (I)
Slow growth of online advertising (IV)
Entrance of Google in the social media industry (IV)
I:Monitor
II:Exploit
III:Investigate
IV: Ignore
I:Competent
II:Prepared
III: Defenceless
IV:Monitor
Opportunities
Threats
Product development (Product innovation)
Due to the fact that they’re the market leader with a strong brand image and customer base , the transition for the creation of an online market place will be easier for them. It will help them penetrate a new market as an extension of the services they offer. Also the addition of the amount of information they have on their customers will help them identify their trends and needs; therefore proposing them some more customised offers.
Market penetration
Market penetration (Process innovation)
Product Development/ Defensive (Product innovation)
Market penetration/ Defensive (Process innovation)
Industry/Product life cycle
Porter's Five Forces
Porter's Value Chain
Culture web
PEST Analysis
Rating
Online marketplace
Expansion to China
Mobile platform
VoIP calls
Facebook Analytics
Industry life cycle
Online apps store a growing market:
1.2bn users (20% of global mobile users)
In-apps purchase up from 11% in 2012 ($18bn in 2012 forecasted $26bn in 2013)
4 out of 5 minutes spent on mobile media within apps
Consumer time spent in shopping apps grew by 274% between 12/2011 and 12/2012
Porter's five forces

Threat of substitute high
Competitive rivalry high
Cost to entrance pretty low for Facebook



Porter's value chain



Adds value to outbound logistics of Facebook.



Culture web


Fit


PEST Analysis


Consumer behaviour trends towards digital spending
Consumer trends towards handheld devices



8.5/10
Seminar 1: Purpose of the organisation
Seminar 2: Analysis of the internal marketing environment
Seminar 3: Analysis of the external marketing environment
Seminar 4: Developing, selecting and implementing marketing strategy
Facebook proposed new mission statement
Facebook's an always evolving and growing company continually looking for innovative ways to revolutionise consumers' every day interaction with technology; whether it's to socialise, use apps, entertain themselves or being informed; Facebook is here for that and all within a safe environment.
Facebook's mission is to give people the power to share and make the world more open and connected. Because at Facebook we believe that it's only by making the world a more open place that it will change how people relate to their governments and social institutions
Analyser/Defence. Money driven. Might lose clan
Industry life cycle



Already saturated market
No previous introduction to china




Porter's five forces


High barriers to entry
Substitutes exist already
Already industry rivalry




Porter's value chain



Adds value to marketing and sales of Facebook




Culture web




Mismatch







PEST Analysis



Political barriers relating to market entry
Social elements show promise but overpowered by political aspects.



4/10
Industry life cycle


Mobile usage growing:
Mobile web receive 217 new users /min
59% of mobile internet users see mobile devices as their primary or exclusive means of accessing the web




Porter's five forces




Low entry, existing platform ready for development
Low number of developed substitutes





Porter's value chain




Adds value to technology development of Facebook and core competencies





Culture web


Fit





PEST Analysis



Social trends of time and mobile use.
Technological advancement with mobile.



9.5/10
Industry life cycle


Growth stage:
14% of global population have online audio conversation
2.4% growth in terms of users in Q1 2013




Porter's five forces



Established substitutes
Low barriers to entry in terms of technology development




Porter's value chain




Adds value to operations of Facebook





Culture web

Fit


PEST Analysis



Social trends of time and mobile use.
Technological advancement with mobile.



9/10
Industry life cycle



Growth as online advertising increases:
Net mobile internet ad revenue :growth of 79.77% in 2013
Net digital internet ad revenue: growth of 12.28% in 2013
One key player only.



Porter's five forces



Almost monopolistic, one key player.
Barriers low with algorithms and customer base.





Porter's value chain




Adds value to the service of Facebook





Culture web


Fit




PEST Analysis



Online advertisement market growing and advertisers want show of return.
Social privacy issues.




8.5/10
Stakeholders expectations and reactions
Profitability
Delivery
Risk
Rating
Online marketplace
Expansion to China
Mobile platform
VoIP calls
Facebook Analytics



Key Players Satisfied



Ability to generate new source of revenue on the short term
Ability to generate long term growth



Within the next 5 years



Medium Risk
Competitors
Main established player (iTunes, Play Store)

8.5/10


Key players more or less satisfied
Consumers satisfied




Massively increased consumer base on the long term
Acquisition of a large database
Increase of their overall market share and customers' activity




About 5 years





High
Political factors
Competitors in strong positions
Low understanding of consumer

5.5/10



Everyone satisfied



(Re)Attract/Retain customers
Potential to be highly profitable
In line with industry trends.



6 months - 1 year



Low
Technology exists
Developed within company
Consumer trends show evident growth in this area

9.5/10


Key Players satisfied
Consumers satisfied



Ability to have a quick impact on consumers
Help increase the overall market share of Facebook
Boost activity of users



6 months – 1 year



Low
Low start up cost
Established players have a focus (niche)


9/10


Everybody satisfied.
Advertising customers very satisfied.


Leads to increased advertising revenue.
More customised advertisement to consumers



1-2 years



Low
Low costs as already partially established
One key player in market

9/10
Future:

Resource Analysis
Culture
Core competencies
Rating
Online marketplace
Expansion to China
Mobile platform
VoIP calls
Facebook Analytics

Resources Available


Analyser

Share of content
Social network
Customised advertisement
Programming
9.5/10
4/10
Resource available
High monetary spending needed for acquisition

Prospector

Social graph & network
Share of content
Customised advertisement

Resource available


Defender


Programming

8.5/10

Resource available


Analyser/Defender

Social graph & network
Programming

9/10

Resource available


Analyser/Defender

Customised advertisement
Social graph & network
Programming
9/10
Suitability
Acceptability
Feasibility
Evaluation
Online marketplace
Expansion to China
Mobile platform
VoIP calls
Facebook Analytics
Suitability results
Acceptability results
Feasibility results
Total rating
8.5/10
8.5/10
9.5/10
26.5
4/10
5.5/10
4/10
13.5
9.5/10
9.5/10
8.5/10
27.5
27
26.5
9/10
9/10
9/10
8.5/10
9/10
9/10
Facebook's future strategies
Short-term strategy
Improvement of their mobile platform
Medium-term strategy
VoIP calls
Long-term strategy
Online marketplace
Advertisement revenue
Number of users
Level of users' activity
Other revenues
Evaluating and monitoring
Group 9 conducted Facebook's internal audit
Group 9 posted adverts of UCB
Group 9 presented their work
Group 9 liked presentation
‘Closed’ innovation
Protect and build
Flanking Attack on Google and Apple
Generate new sources of income by selling apps and games for third parties
Differentiation
Internal development
Acquisition
Position Defence
Retain and attract new advertisement consumers
Developing new mobile features (e.g. VoIP calls, video calls, etc.)
Differentiation
Online marketplace
Mobile platform
Product development
Acquisition
Guerrilla tactics
Counter Google possible competitive advantage
Retain and attract new customers
Respond to consumer behaviour trends
Cost leadership
Internal development
‘Open’ innovation
Pre-emptive defence
Challenge Google in terms of advertisement revenue
Increase online advertisement revenue
Differentiation focus
Voice over Internet Protocol (VoIP) calls
Facebook Analytics
Privacy issues
CSR Concerns???
Facebook analytics
Presentation of Facebook's study
Exam of Strategic marketing Management
Announcement of 1st semester grades
Announcement of 2nd semester grades
Graduation Day
Conclusion
Full transcript