WhatsApp Strategy - Case Study Example

WhatsApp Case Study Summary WhatsApp is an app designed for the use on smartphones and provides an instant messaging option. Users of the app are able to send images, videos, text messages, audio media messages and user location information. The mission of the application is creating a cheaper option for text messaging with increased features on media messaging. Since the creation of WhatsApp, the app has been growing massively across the globe. By April 2015, the application had eight hundred million active users. This number represents the increasing massive market perception of the app. In addition, WhatsApp has been able to beat existing and new competitors in the instant messaging industry. This success led to its acquisition by Facebook. The main problem facing the future success of the app is the competition and the changing paradigm of the industry. Across the globe, competitors have been steadily increasing with more effective strategies in regards to the creation of new trends and monetization. Given the current market situation, how can WhatsApp adapt its strategy to overcome emerging competition in future? The analysis will discuss WhatsApp’s competition and evaluate the advantages and weaknesses of the app over emerging competition in its quest to attain the future competitive advantage. Analysis Over the years, the instant messaging industry has been characterized by its massive growth. Consequently, entrants in the market have greatly increased. Regardless of the trend, WhatsApp has been able to position itself as a market leader in the six years it has been in existence. Since the creation of the application in 2009, WhatsApp has been largely preferred by the consumer population in the United States as well in the global market. The success of WhatsApp in the global market is solely based on that these markets lack a cheaper option for text messaging (Page, 2015, 1). The strategy was also effective in beating existing competition in the industry. However, in markets with cheaper text messaging options the application has not been massively embraced. This is due to the few features and products that the application offers to the trendy market. This is a major problem in the future in regards to the creation of a greater competitive advantage over the emerging competition. The ability to compete effectively is created by the development of operational structures based on the strategies implemented by competitors (Porter, 1980, 29). By WhatsApp lacking these structures, the app does not have a competitive advantage over emerging competitors in the future market. The future success of the instant messaging industry is directed by the level of creativity embraced by existing and emerging applications. WhatsApp has not aligned its strategy effectively to increase its ability to compete competitively with creative apps in the industry. In addition, emerging applications may use the same strategy as WhatsApp (Porter, 1980, 29). This would make free text messaging a less significant strategy to attain a competitive edge. For instance, the Asian market is more preferable to products that offer more services other than text messaging, video and images sharing. For this reason, apps offer other services such as online gaming and selling emoticons (Page, 2015, 1). In an analysis of this trend, it is accurate to assert that the future competitive ability of WhatsApp does not match the efficiency of emerging competition. For example, the preference of WhatsApp in the United States is not growing as fast as its initial market performance due to new competition with more trendy features and services. WhatsApp’s future competitive ability is also affected by the nature of the industry. Similar to the social communication industry, the market perception and preference shift quickly due to emerging trends (Rotolo, 2015, 1). The direction could be justified from that old market leaders in the information technology industry do not hold the same status due to modernized competition and the changing perception of the market. The same could apply to WhatsApp in the future as market preferences will shift to a new technology or a new paradigm of instant messaging. The market preference shift is influenced by the quickly emerging applications with more space to incorporate originality and trends more effectively than WhatsApp. This is the greatest threat to the future competitive ability of WhatsApp. The application’s best option would be to prolong its dominant competitive nature in the current market by increasing their level of creativity and aligning their strategy to trends embraced by emerging competition (Porter, 1980, 294). Regardless of these challenges, WhatsApp has a great probability of competing effectively in emerging markets due to its software development and enhancement abilities. Specifically, the application is able to adapt to new software developed for smartphones. In the current market, the direction of application development is determined by the available smartphone technology in the market. For instance, the original design for WhatsApp could only be supported by the iPhone. After the realization of the gap, the creator of the app strategized for the creation of application designs that could suit other smartphones technologies (Rotolo, 2015, 1). This strategy can be attributed to the future growth and ability to compete by WhatsApp since 2009. With varying smartphones designs, successful applications have the ability to be compatible with every software design available. Smartphone software development also dictates the future of the instant messaging industry. For WhatsApp, this is a not a significant problem as the application can be developed to suit the compatibility of any exiting software. With this property, WhatsApp’s future competitive ability is perfectly positioned. The enlarging instant messaging market would be to access the application regardless of the changing designs of smartphone technology. The value of WhatsApp could be a great determinant of either the success or failure of the brand. Brand value determines the ease at which a company is able to sell its product or acquire strategic partnership. This is a major problem for WhatsApp due to its less effective monetization strategies. In the future this would be a major problem considering the brand value would minimize and it would not compete effectively in the market. WhatsApp’s main revenue is generated from the annual purchase of the application at $1 (Rotolo, 2015, 1). In comparison to its competitor, Snapchat, the application has to its user services the Snapcash which allows users to send money (Whitefoot, 2015, 1). In addition, Snapchat has a project to introduce advertisements from which the content to be viewed is selected by the user (Whitefoot, 2015, 1). With poor monetization abilities, WhatsApp may not be able to compete with products that monetize their services. The insignificant brand value may also be a great hindrance to developing a large market presence. Consequently, the application will lack the ability to beat emerging competition. However, WhatsApp has a great value in regards to its market presence. With over 800 million active users, the application has an extensive market reach that provides a greater competitive advantage (Page, 2015, 1). Additionally, the purchasing power of the active users is massive. In regards to future competition, the number of active users determines greatly the ability of an application to command a great presence in the market. Due its ease of access and availability, the active users of WhatsApp will continue to increase considering that the number of smartphone users are rapidly increasing. Regardless of the advantages, the success of the strategy is based on how effective the active users’ population will grow. If the growth of its active users is not significant, the value of the app’s user population may not be effective in overcoming emerging competition in future. WhatsApp’s greatest challenge is the emerging competition and its lack of effective competing strategy. For instance, in the Dutch market the application enjoys a large population of active users at 9.7 million but its popularity growth cannot match emerging competition like Snapchat (Press and Update, 2015, 1). Over the past six months in the Dutch market, the greatest ever number of teenagers have uninstalled the app and installed Snapchat (Press and Update, 2015, 1). The trend in the Dutch market depicts the global decreasing preference of WhatsApp as the preferred app for instant messaging. The competitive advantage held by Snapchat over WhatsApp is based on new trends available for the Snapchat users. The application provides its users with the ability to personalize videos and images with texts or drawing. Additionally, the app may allow its users to watch news from the app after which they disappear from the user profile (Whitefoot, 2015, 1). For emerging competition in the future market, these adjustments increase their competitive advantage over existing competition like WhatsApp. The acquisition of WhatsApp by Facebook also creates competition for WhatsApp in the instant messaging industry. For instance, the latest adjustment for WhatsApp; inclusion of the video calls feature has been embraced by Facebook Messenger making the service less relevant in regards to attaining a competitive advantage (Truong, 2015, 1). With WhatsApp and Messenger having the greatest number of active users, the dominance of WhatsApp in the industry is largely limited by this acquisition. The future dominance of WhatsApp over Facebook in the industry is limited considering that the latter has 1.4 billion users who are directly aligned with the Messenger app. WhatsApp has an exceptional brand equity due to its large active user population. With a user population of 800 million, the app is the leading global application in the instant messaging industry. For this reason, WhatsApp holds an advantage over emerging competitors which have to first grow and build their brand equity. The growth of the active user population of WhatsApp is largely growing regardless of the popularity loss against its competitors (Press and Update, 2015, 1). This growth places WhatsApp in a great position to increase its ability to increase its brand equity. The growth of the brand equity is also influenced by the extensive popularity of the app in the global market. The creation of most mobile app stores is inclusive of WhatsApp which increases the ease at which the app can be accessed by the target market. The brand equity is also developed by the compatibility of the app to all smartphones. Recommendations The most relevant recommendation for WhatsApp is to increase its marketing ventures. In its current operational strategies, the app is not effectively marketed. The competitor nature of a product is based on how well it is known it its target market. In the United States, the number of smartphones users is 180 million, and marketing the app to this population may increase the number of active users of the app in the country. This recommendation is inclusive to more advances towards brand marketing. The application is widely known across the globe which makes its market knowledge rather inevitable. However, if the brand ventures into new services and features; brand marketing would be the most effective marketing strategy. Brand marketing may also entail partnering with leaders in the mobile industry to educate their consumers on the availability and features and services offered by the app (Dahlen, Lange & Smith, 2010, 78). Marketing of the application also provides the opportunity to increase brand equity. Brand equity development provides an advantage in regards to the size of market the app may command. The buying decision of the market is directed towards the product with great brand equity (Kotler & Keller, 2012, 77). WhatsApp should also provide more features and services for its users. The future competition of the industry would be determined by the capability of an application to offer users more trendy services. For instance, Snapchat offers the personalization of videos and images for its users making it trendier than WhatsApp. Increasing brand relevance would be effective with the creation of categories and subcategories (Aaker, 2010, 6). Categories and subcategories refer to the creation of more services that are aligned to the product. The number of services a product offers to the market determines its relevance to the consumer (Aaker, 2010, 6). This recommendation should be embraced by WhatsApp. The categories may offer new services and features that are linked to the mother brand. For instance, a category of online gaming and marketing may be created. To increase the competing value of WhatsApp, monetization of its services should be a priority. For instance, if the app can sell its video calling services, the profit generated from the venture would be massive (Valli, 2015, 1). With the number of active users of app increasing, the monetization process of its services would be a major factor in its quest to favorably compete with emerging competition in the future market. The need to take part in competitor analysis is highly recommended for the creation of effective operational strategies (Porter, 1980, 47). For WhatsApp, a competitor analysis provides the opportunity to understand the trends embraced by emerging competition in future markets. Competitor analysis should be inclusive of industry forecasting (Porter, 1980, 71). Industry forecasting entails the understanding of future trends, market preferences, possible opportunities and threats. Considering that the brand lies in a quickly evolving industry, understanding past signals leading to the current market nature would be an effective recommendation for WhatsApp. This would allow for the creation of effective strategies for competing with emerging competition in the future. Implications Brand marketing is based on that the increased market knowledge would directly improve the products and services market performance (Kotler & Keller, 2012, 79). Brand marketing through partnership would increase the market reach of WhatsApp and improve the brands position in the market based on the ease of access by the target market. Most importantly, brand marketing would increase the market presence of WhatsApp in the emerging market. This would place the app in a great competitive position. The competitor analysis recommendation provides an operational strategy (Porter, 1980, 47). The competitor analysis for WhatsApp should be mandatory. This based on the fact that the instant messaging industry is highly evolving in nature and understanding the available trends in the market is crucial. The brand could be benefitting in the creation of ventures that could match the competitors’ products and services. In addition, the competitor analysis increases how the brand evaluates the perception of the market on the competitors’ products. This improves the market knowledge and creating forecast on the expected market behavior. Identifying past market signals also improves forecasting strategies (Porter, 1980, 76). By WhatsApp identifying market signals, the brand is able to make directed strategies towards attaining a greater future competitive advantage. The implication of increasing the features offered by WhatsApp is increasing the brand relevance of the app. WhatsApp as a brand is widely known or acknowledged on what if offers to the market. Consequently, the relevance of the brand in the future market would be determined on how well the app has addressed the numerous needs of the consumer in the instant messaging industry. By raising the brand relevance, the competitive ability of WhatsApp against emerging competition would be effective in the future market. The brand equity of WhatsApp depicts the level at which the consumer prefers the app over emerging competition. For this reason, raising the brand equity of WhatsApp would also raise the market reach of the app. A huge brand equity would increase the number of consumers interested in purchasing the app as well as attract emerging markets in the industry. In regards to the power to compete against emerging competition, a great brand equity would make it easier for WhatsApp to increase the number of its active users. Works Cited Aaker, David. Brand Relevance: Making Competitor Irrelevant. New Jersey: Jossey-Bass. 2010. Print. Dahlen, Micael., Lange, Fredrik. & Smith, Terry. Marketing Communications: A Brand Narrative Approach. New York: John Wiley & Sons. 2010. Print. Kotler, Philip. & Keller, Kevin. Marketing Management. New York: Pearson Education Limited. 2012. Print. Page, Vanessa. How WhatsApp Makes Money. April 9, 2015. Web. May 5, 2015. Porter, Michael. Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: The Free Press. 1980. Print. Rotolo, Anthony. Why Did Facebook Buy WhatsApp. Feb 20, 2014. Web. May 5, 2015. Truong, Alice. Tale of Two Chat Apps. April 22, 2015. Web. May 8, 2105. Valli, Larry. Facebook Inc (FB): Is There A Secret Master Strategy For Monetizing WhatsApp. April 21, 2015. Web. May 8, 2015. WhatsApp vs. Snapchat: Which One Do You Prefer? Press and Update. May 4, 2015. Web. May 8, 2015. Whitefoot, John. How Does Snapchat Make Money: Two New Revenue-Generating Streams to Attract Investors. May 1, 2015. Web. May 8, 2015. Read More