Critical Analysis Of Facebook’s History, Resources, And Market Situation

Facebook Inc. Background

Question:

Facebook Inc is a global online social network that has about one billion member accounts. However the organisation is less than 10 years old. Despite intense media excitement when Facebook listed as a public company in May 2012, the share price has bobbed around quite a bit since. Many business analysts are beginning to question the company’s long-term viability because it is difficult to discern a coherent business strategy.  
Your task in this case analysis is to answer two questions by critically analysing Facebook’s history, resources and market situation. Please do not just describe events, although you should read Facebook’s history to understand the background to your analysis. You should use the principles and concepts that you have learned throughout the unit to answer the following three questions:  
1. What marketing strategy or strategies has Facebook adopted since it was created? Answer this question by applying one or more of the theoretical approaches discussed in the course.  
2. What marketing options can you describe for Facebook if it wishes to remain a successful organisation throughout the next decade? Answer this question based on the circumstances that exist in 2014 and your best forecasts of relevant future industry factors.

Executive Summary:

This report will critically analyze the history of Facebook, its resources and market situation. Facebook Inc is a global online social network having account of near about one billion members within the time period of 10 years. To accomplish the report information about Facebook and its marketing strategies has gathered. The report analyzes the strategies adopted by the company from starting years. It is found in the research that despite the intense media excitement in May 2012 when Facebook get listed as public company, since then the shared price bobbed around quite a bit (Di Pietro, Loredana and Pantano, 2012). Due to this fact business analyst around the world are started questioning long-term viability of the company as they found it difficult to discern a coherent business strategy of Facebook. Hence the report will also discuss the strategic marketing options for Facebook in order to make it a successful organization for upcoming years.

Introduction:

Only few social networking websites like Facebook can manage the fun and work in unique manner. To enable people to socialize in an effective manner is core advantage of websites like Facebook. In order to setting business and promoting it Facebook uses unique format and business scope is differentiating factor of Facebook from competitors. Facebook uses can be divided into two main parts one is for business use and another is for personal use. Through the analysis we will deeply understand and discuss the strategy of the company and the report will be ended through the recommendation that is the strategies options given for Facebook. It is the fact that Facebook created art an emotional asset through friends, their pictures, posts and lots of messages and status of relationship and due to this it has become a way of life for many people (Cha and Jiyoung, 2009). But along with this Facebook usage is extremely increased for the business purpose. Facebook implemented various marketing strategies successfully such as Viral marketing, Network marketing and so on.

Marketing Analysis

Facebook Inc. Background:

Facebook is world’s most used online social networking service and headquarter is located in Menlo Park, California. Firstly Mark Zuckerberg launched this website with his college roommates and the fellow students of Harvard University in February 4, 2004. The website access and membership was initially limited to Harvard students only, later on the access was passed to Stanford University, Boston area and so on.

Mark Zuckerberg is the founder of Facebook and though its starting year is 2004 but it was open to the entire users around the world in 2006. After the starting Facebook never look back, it has grown rapidly. In the third quarter of 2014 Facebook 1.35 billion monthly active users. It has been given preference by marketers as innovative ways in order to outsmart their rivals. Any person who is 13 years old or more and having valid email address can able to create Facebook profile.

Alexa.com is an internet market research company and it has declared Facebook as second most visited website in the world after Google in its 2010 report (Curran, Kevin, Graham, and Temple, 2011). Over the other social networking websites Facebook is chosen by marketers due to the reasons like number of users uses it, provide amount of customization and to stay in competitive market.

 Marketing Analysis:

Nature of Facebook Marketing Strategies:

Assessing the current competitive position of organization and identifying future valuable competitive position and find way to achieve them is strategic analysis.

PEST Analysis:

Political Factor:

Facebook always has the strategy of providing secure social network to its users. Still Governments and members of the site have been showing their concern towards privacy and it could harm the strategy of company which uses the information of user in order to deliver effective advertisement (Chu and Shu-Chuan, 2011). The class action law suit filed against the company and it could potentially imply $15 billion of damage in the case of success and it would challenge the ability of facebook increase towards gaining advertising revenue

Economical Factor:

As compare to competitors Facebook recorded high growth rates. Company’s inherent ability is highlighted through its revenue growth rate and in the social networking advertising Facebook being the market leader with strong potential. Due to its low expenses base Facebook has enabled to drive higher margins than its competitors and it indicate better aligned cost structure.

Social Factor:

Facebook made a strategy to enter into mobile application market by launching the App centre and it is Facebook’s first step to monetize the mobile user base. In order to find social app App centre is new place for people (Harris, Lisa and Dennis, 2011). Insight is provided by Facebook to facilitate successful apps. The company does not earn revenue because owners of operating system are the only players that can sell apps.

Technological Factors:

Due to the adopted inherent business model Facebook ads are yet to be proved for effectiveness. Facebook strategies are lacking in online ad market, as it depends on display ads and users do not have good experience and not efficiently produce revenues (Zinnbauer, Markus, and Honer, 2011). It is observed through research that Google provide more value to advertiser regarding to opinion and results as compare to Facebook.

Nature of Facebook Marketing Strategies

 Porter’s Five Forces Analysis:

Threat of new entrance: Facebook is largest social networking site along with billion active users and hence threats of new entrance are very low, because it is difficult for new social networking site to reach or compete Facebook position (Ferguson and Rick, 2008). Google plus is only competitor in race.

Threat of substitute: Threat of substitute is moderate, as many countries have their own social network operating throughout the region. But Facebook has users around the world which makes it attractive internationally, but we cannot forget Google the biggest competitor of Facebook and they are competing in various aspects from social networking through Google+ to advertising.

Bargaining power of customers: Customers of Facebook include the advertiser and users. Advertisers pay Facebook for utilizing its platform. Facebook get $ 1.33 billion revenue from advertising which is 84% of total revenue of Facebook and 41% increase from the same quarter last year (Zeng et al., 2012).

Bargaining power of suppliers: Suppliers are no one but its Facebook users and the information provided to Facebook by users in terms of likes, comments, posts etc can be used to push advertiser to the wall of users. Bargaining power of user can be high as they have options to switch to Google+ but since most users friends on Facebook, so connecting with them on another platform does not make sense.

Competitive rivalry: The intensity is low at social networking market as in comparison with Facebook there is no other social websites having 1 billion active users. Most of other social sites are limited within particular countries like vk.com in UK, renren.com in Germany and so on. Google+ can be considered as possible threat though it have 1/10^th of monthly users.

 Strategic Marketing Options for Facebook moving forward:

 The discussion here is on the opportunities to innovate on Facebook platform and reduce its complexity for established and new developers. It is found through the research that application communication channels such as notifications and requests are not effectively servicing their original purpose. The significant opportunities can be created in Facebook strategies to improve the experience of user as well as reduce spam with the replacement of better features and can move more communication to stream and inbox. Above mentioned and further discusses ways in this topic will simplify the site and can create new long term opportunities for users and Facebook can become successful for next decade.

 Make direct and simplified communication with user:

Access to user email addresses: In order to reduce friction and increase the power to application. Facebook connect developer to manage their relationship with users, and it is simple and easy way to share their email addresses.

Provide more focus towards Facebook communication on the stream and Inbox: It will help to consolidate communication between developer and user into two most powerful channels that are stream and inbox can become new feature which help user to engage with applications.

 In order to get success in future business environment and increase revenue Facebook need to change or improve its following strategies:

• The features need to get changed which are used to create business page on Facebook, which is currently uses personal profile or as a standalone page.
• Next strategy is free registration process
• The strategy of awarding the URL after completing the 100 signup fans.
• Development team should rearrange the concept of wall and discussion forum.
• Regenerate scope which will integrate other media’s
• Improve the paid advertising program on Facebook
• Important to work on more good look and feel along with the robustness in technology.
• Provide provision for monitoring activities

  Conclusion: 

When company executives develop corporate strategy, they start with analyzing the company along with the market environmental conditions they are operating. Strengths and weaknesses of the competitors are essential to know. Through analyzing company position and competitive analysis, different strategies are developed in order to perform superior than rivals. Facebook continuously outperforming as compare to its rivals. The logic can be concluded throughout the report that strategic options are bounded by business environment. That means structure of Facebook shapes strategy for it. It is also concluded that the performance is depends on the basic strategic factors like number of suppliers, buyer and entry barriers.

Reference List:

 Di Pietro, Loredana and Pantano, E. 2012. “An Empirical Investigation of Social Network Influence on Consumer Purchasing Decision: The Case of Facebook.” Journal of Direct Data and Digital Marketing Practice 14: 18-29.

 Curran, Kevin, Graham, S. and Temple, C. 2011. “Advertising on Facebook.” InternationalJournal of E-Business Development 1: 26-33.

 Chu, Shu-Chuan. 2011. “Viral advertising in social media: Participation in Facebook groups and

responses among college-aged users.” Journal of Interactive Advertising 12: 30-43.

 Cha, Jiyoung. 2009. “Shopping on Social Networking Websites: Attitudes towards real versus virtual items.” Journal of Interactive Advertising, 10: 77-93.

 Harris, Lisa and Charles Dennis. 2011. “Engaging customers on Facebook: Challenges for e-retailers,” Journal of Consumer Behavior 10: 338-346.

 Ferguson, Rick. 2008. “Word of mouth and viral marketing: taking the temperature of the hottest trends in marketing.” Journal of Consumer Marketing 25: 178-182.

 Zinnbauer, Markus, and Tobias Honer. 2011. “How Brands can Create Social Currency- a Framework for Managing Brands in a New Era.” Marketing Review St. Gallen 28: 50-55.

 Zeng, Fue, Li Huang, and Wenyu Dou. 2012. “Social Factors in User Perceptions and Responses to Advertising in Online Social Networking Communities.” Journal of Interactive Advertising 10: 1-13.