The Chinese Social Networking Website: Renren - Term Paper Example

? E-commerce During the early 1990s internet started to impact the global economy to a large extent. Organizations had also understood the fact that, internet is one the best medium of carrying out the business in a cost effective way and directly selling the products to the end user, thereby restricting entry of any third party. Furthermore, number of other advantages of internet was also recognized. Slowly with the development of information technology the concept of e-commerce was also developed and integrated into the business processes of the organizations. With more developments, several applications came forward and became households. One such example is the social networking websites. It not only embraced large number of users, but also has been able to grab the attention of the marketers. This is the reason why we find several social networking websites operating in the market place. Nowadays organizations around the world make substantial investments in the social networking platforms and utilize it as a promotional medium. The report will therefore mainly focus on the happenings of social networking world. In this regards the Chinese social networking giant Renren will be used as the social networking website. Furthermore the report also proposes to offer a comparative analysis of Renren and Facebook. Now since the report will follow a ‘funnel format’, it will commence after defining the broader terms. Once the broader terms have been illuminated, the report will shed light on the main discussion area. The discussion area will therefore cover various aspects of Renren such as its risks, threats, opportunities, strengths, weaknesses, competitors etc. Most importantly, the marketing aspect of social media and Renren will be also emphasized. The discussion part will end after comparing Renren with Facebook. Finally the report will conclude and will also offer few recommendations. Table of Contents Introduction 4 Social networking: A brief Overview 4 An introduction to Renren 4 An Introduction to Facebook 5 Discussion 5 SWOT Analysis 6 Risk Factors 7 Sources of Revenue 7 Competitor Analysis 8 Consumer Analysis 9 The Marketing aspect of Social Media and Renren 9 Renren Marketing Aspects 10 Differences between Facebook and Renren 11 Application Differences 11 Interface Differences 12 Recommendations 13 Conclusion 13 Introduction The concept of internet was initiated in the early 1950s when the electronic computers were developed. After the introduction it passed through various development stages and finally was commercialized in the year 1992 (Majumdar, Cave & Vogelsang, 2005, p.346). The primary rationale behind the commercialization of internet was to enable the users to share information and resources over the networks. Also communication was an important aspect of the internet. Once it got commercialized, human being witnessed the rapid growth and use of internet throughout the world (Reynolds, 2004, p.5). The rapid expansion most occurred in parts such as Australia and Europe. They were the earliest adopters of internet. Since the year 1990 interned has been able to impact the daily life to a large extant. Mostly the culture and the trading activities were highly impacted. Some of the important applications of internet include instant messaging, e-mail, two-way interactive video calls, phone calls, social networking, World Wide Web with its conversation forums, Voice over Internet Protocol (VoIP) blogs, and online shopping. Thus internet has now become important in all the facets of civic, political and social life. Among the aforementioned application, social networking has been able to drive huge number of users towards them. Hence before proceeding towards the main discussion of the project, a brief overview of social networking is presented below. Social networking: A brief Overview A social networking service is based on providing services through online platforms. Social networking services are also the websites that helps to build social relationship among the people. In the social networking world, every individual user has some form of virtual representation, often referred to as user profile. Social media can be of different types such as photo and video sharing sites, blogging sites, and social networking sites (Shelly, Vermaat, Quasney, Sebok & Freund, 2011, p.14). Some of the well known sites among the aforementioned category include Face-book, Renren, Twitter, Orkut, YouTube, LinkedIn, and Yelp among various others. This report will however focuses mainly on Renren, the most popular social networking of China. The discussion will also offer a comparison report between Renren and Facebook. Hence it becomes necessary to introduce both the social networking websites, so as to get in-depth and better understandings of the discussions. An introduction to Renren The Renren Network is a Chinese social networking website, which was developed or exists as a remake of Facebook in Chinese language. Earlier it was known as Xiaonei Network, which signified on-campus network (Fannin, 2011, Destined to Innovation Fame). The social networking website was founded by Joseph Chen in the year 2005 and is headquartered in Beijing, China. It is extremely popular in China and mostly among the college student and even some calls it as the Facebook of China. As of 2011, the company had a total of 31 million monthly active users. After the large acceptance in the market place, the platform was also made available in mobile. The mobile version or WAP version embraced tremendous popularity within a very short span of time. The popularity was sky-rocketed after the company launched the instant messaging services. It ever surpassed the popularity of Facebook’s instant chat option. The primary target of the company is college students. Nevertheless it also caters to the sections such as high school, colleges, hometown and middle schools. At present, there are around 32,000 colleges and universities, 85,000 companies and around 56,000 high schools in China ‘Renren’s confirmation system’. Moreover approximately 1,500 universities spread across 29 countries of the world are available on ‘Renren confirmation system (Wen, 2010). The company is also listed at the 100th position in the Alexa ranking of online companies. An Introduction to Facebook Facebook is a social networking website, which connects people from different parts of the world. It was launched in the year 2004 (Facebook, n.d.). The networking site is fully owned and operated by Facebook Inc. Mark Zuckerberg along with his roommates Andrew McCollum, Chris Hughes, Dustin Moskovitz and Eduardo Saverin developed Facebook. The company is presently headquartered in California (Facebook, n.d.). However Facebook intends to open its headquarters in Dublin, Ireland. The mission of the company is to offer people around the world, the power of sharing and making the globe more open as well as connected like never before. Initially when Facebook was launched it was only limited for the access of students of Harvard, nevertheless with the passage of time the restriction was uplifted and it also spread its wings to other universities as well as to the school students above 13 years of age. However the boom occurred in the last 5-6 years when people started to take interest on social media. The interstate was such that within a few years of time it became the world’s most popular as well as populated networking site. The company is also listed at the first position in the Alexa ranking of online companies. According to the new data released in the year 2012, Facebook had more than billion active users. The survey also revealed half of the total active users are using it through their mobile devices. The growth of Facebook continued and it went on to release shares in the market at $38/piece. In this context also the company made records by becoming the world’s first listed company to get valued by $104 billion. In the year 2011, the total revenue of the company was around $3.71 billion. Discussion This portion will mainly highlight the several aspects of Renren and will also present a comparative analysis with Facebook. In this respect the differences will be provided on the general factors as well as on application factors. There will be few technical areas, but the stress will be on the general factors. SWOT Analysis SWOT analysis is carried out to assess the internal strengths, weaknesses and external opportunities and threats of a company (Williams, Champion & Hall, 2011, p.108). Strengths: - The strengths of the company are as follows:- Some of the prominent and noteworthy websites from China are promoting the profile pages of the Renren. Also some of the international websites are promoting Renren’s website as well as discussing the stock value of the company. The interface of the website is very light and extremely attractive. Apart from the profile pages the website also offers fan pages, forums, applications, movies and groups. Apart from those other features such as online, growth, innovation, loyal customers and effective communication are some of the strengths of Renren. Weaknesses: - Although Renren is a big hit in China and competing with Facebook at the highest level, it has a number of weak points or the weaknesses to deal. Some of the major weaknesses of Renren are illustrated below:- Renren does not work properly in operating systems such as Windows XP and Windows vista. It does not offer any customization application. The social network uses extensive animations and flash items, which makes it difficult for the users to load the home of the website. Absence of any short cut in the profile page. Opportunities: - The social network was launched in the year 2005, and since then it has its boundaries within China. However the company now holds certain opportunities, and if capitalized properly can offer the website a large number of benefits. Some of the opportunities of Renren are highlighted below:- Renren has the opportunity to spread its wings and make an international presence. However in order to do so the language barrier needs to be uplifted and Renren must be made available in other languages. The company can also look after the possibilities of implementing multiple - video conferencing and audio platforms for interaction. Can make the graphics more apparent or can completely give a makeover to the interface, which will help to remove the tag of ‘Facebook-clone’. Threats: - The threats of the company are listed below: - The company gets strong competition from other social networking sites such as Facebook, twitter, Orkut, MySpace and local Chinese social networks among the others. The technology of the company is also cheaper, which increases the percentage of risks. There are no controls over the emails and also there large number of spam attacks. Weak security is also another area of concern for the users. It may exploit the personal information of the users. Risk Factors Indexing Issues: - Apart from the profile pages of brands and celebrities, it does not allow search engines the visitors to view others profile page without logging in to the account. Sometimes the different URLs in the website display similar contents, which can be considered as a risk factor for both the consumers as well as for the company. In order to cite an example, in the recent past the URLs http://page.renren.com/600008765/index and http://asus.renren.com displayed similar contents. The security of the customers is weak. Anybody can copy or save images from the profile of others. Therefore there are risks of pornographic elements. Furthermore the personal information of the clients is getting explored. Sources of Revenue In general there are two major sources of income for the company. It includes: - IVAS (Internet Value Added Services):- The IVAS source of revenue mainly comes from online games and other applications. The majority of the revenues are generated from the online purchase of applications and other virtual items. Other revenues are earned from the merchants who offer their products and services nuomi.com. Furthermore VIP membership is another area from where the company earns substantial portion of the revenue (Edgar-online, n.d.). Online Advertising: - Online advertisements are also another segment from which the company earns a substantial percentage. It earns from a variety of advertisements. The advertisements are positioned at suitable position of the interface. The advertisements are mainly charged according to the pay –for –time arrangements or pay-per place arrangements. Again due to rapid increase in the social networking and online advertising platforms, the company does not exactly reveal the prices that are charged for advertisements. Figure 1- Financial Data (Source: Edgar-online, n.d.) Competitor Analysis It is impossible for a company to operate in vacuum. Hence there will be competitors in direct or indirect forms (Youngman, 1998, p.1). This segment of the study will highlight the local as well as international competitors of Renren. It has been found that a large number of competitors are present in the social networking industry. Some of the major local competitors of the company are Kaixin001.com, Pengyou.com and 51.com among others. On the other the international competitors of the company includes facebook.com, twitter.com, linkedin.com, orkut.com, myspace.com and hi5.com among various other companies. Hence with such large number of competitors the competition is intense. Figure 2- Competitors (Source: Resonancechina, 2011) Consumer Analysis Social networking is used by almost every individual, whether it is male or female. Nevertheless the ratio of social networking users among the teen population is extremely high. The consumers of the Renren have been also segmented on the basis of various demographical aspects. Also studies highlights that the users of social media in China are extremely loyal and thus prefer to stick with what they like at the initial taste. The Marketing aspect of Social Media and Renren The marketing aspect of social media is highly dependent upon the e-commerce. In social networking sites, we find advertisements of various companies, but if we notice properly, most of the advertisements are from online retailers. The online retailers use the technology of e-commerce in social media like Renren and Facebook to promote and sell their products directly to the end customers (Singh, 2009, p. Classifying consumer activities). Electronic commerce or what is commonly known as e-commerce is an application which facilitates online selling and buying of goods and services. It offers online fund transfer, Electronic Data Exchange (EDI), online marketing and different other applications. The major advantages of using e-commerce are maximization of speed in the context of service delivery, reduction in the overall cost and also quicker response to the customers. Electronic commerce also plays crucial role in the process of online payment. Online payment method refers to the process of directly transferring funds to the seller’s bank account. The biggest advantage of an online payment option is that it instantly completes the entire process of payment. The electronic payment options which are accepted in e-commerce include credit cards, debit cards, cash cards and internet banking. With this given facilities online retailers remain more active in social networking websites. Renren Marketing Aspects It offers a number of benefits which are attractive to the marketers. Studies reveal that Facebook is the world’s 4th largest populated place. Therefore if an organization develops a sound strategy of social media marketing, it can draw huge traffic towards its business through its official website. With the use of Renren, organizations effectively target its customer base. They achieve it by making use of various tools and elements offered on the platform. It enables enhanced visibility of the organization’s content. Moreover the reach of Renren is huge and any organization can promote its products and services at the national level in China. The national reach of a company in turn enhances the brand value of a company. Mostly companies involved in the process of online selling remains highly active with Renren. In order to cite an example 360buy.com, ebay.com, 56.com etc. remains hugely active in Renren (China Internet Watch, n.d.). They develop some attractive and visible contents and place it anywhere within the interface. Once the users click, it redirects them to the host website. Thus the process of targeting is simple as compared to other forms. Renren also offers high visibility rate to the markets. With the applications such as blogging, tweeting and posting contents marketers can spread their information to a large extent. Since there are millions of people visit Renren in a day, the chances of a successful promotion gets highly increased. Thus with new content and regular updates, the visibility of a company reaches new heights. Figure 3 – Number of Active Renren Users (Source: PaidContent, n.d.) Differences between Facebook and Renren Renren is dubbed as the clone of Facebook in China (Fsfe, 2011). The company however is a huge success in the markets of China. The social networking site has been able to create a buzz, since its launch in the early 2005. The excitement once again increased when the company went public. Also by the end of 2011 the social networking website has been able to accumulate 160million registered users. However there are some large differences between the Facebook and Renren. Some of the major differences are highlighted below:- Application Differences A. Friend-based Social Platform vs. Feed-based Social Platform Both the websites, undoubtedly belongs to the category of social networks. Nonetheless, the concept of social in varies in both the websites. As for example Renren is slightly more friend oriented. On the contrary Facebook mainly focuses on the happenings within the social circle that are mainly events. Thus it is clear that Renren in ‘friends oriented’ whereas Facebook is ‘events oriented’. From a broader aspect Facebook promotes ‘what is happening around’ while on the other hand Renren promotes ‘who are the users or friends’. There are large differences that are based on the Interface and applications of Renren and Facebook. However among several differences some of the major technical differences between Renren and Facebook are as follows: Special friends vs. Two top news – In Facebook if users create friend groups he/she will be able to differentiate the social circle. In case of Renren the social network offers another special function, where the user can select 3-4 friends as a special friend. However Facebook does not have any special friend filter. Friend recommendations – Friend recommendations are an important part of Renren. The friend recommendation status bar always remains active in Renren, whiles the friend recommendation status bar, and gets active occasionally in Facebook. Birthday reminder & events reminder – In case of birthday reminders and event reminders both the social networks are extremely aware. However for Facebook, events are more important than birthdays. B. Two-way Attention vs. One-way Influence Recent visits – From the inception of Renren they are offering the customers with the facility to view the recent visitors into their profile. However Facebook being an old player, till date, does not offers any applications that allows one to view the recent visitors. C. Notes vs. Status Notes vs. Status – Renren offers the note function, while Facebook offers its user with the status function. In face a use can any time update his or her status. D. Value-added Service vs. Free Visit award – Renren offers badges and promotes the profile to the next level for frequently visiting the profile. While the same is absent in Facebook. Moreover there are doubts on whether a Facebook user would like to decorate their profile page. Buy gifts for your friends – In Facebook users does not have the option to actually gift anything to the friend, apart from the virtual gifts. However Renren offers the option of actually buying and presenting a gift to the friends, from the online stores, such as amazon.com or eBay.com. Interface Differences In Renren a user can see who has visited his/her profile while, this feature is unavailable in Facebook. If an individual wants to add any external applications to the profile, he/she needs to pay some extra money. Even for writing the profile name using some specific colors or for adding animation to the profile name, the users have to pay some money to the company. Again Facebook does not charge anything for the purpose of adding any applications in the profile page. Nevertheless Facebook offers points for which fully working applications can be unlocked. In that case that is to earn point the users have to pay. Renren is mostly used by the teenagers or more specifically by the university students. On the other hand Facebook does not have any specific segment. It is being used by almost every age group. In addition, the biggest advantage of Facebook is that, it offers its interface in a number of languages and thus it holds the chance of catering to large number of customers. Furthermore it gives greater market access. Recommendations The recommendations section will shed light on how to improve Renren and how it can compete and sustain in this turbulent business environment. The recommendations will be also about how the social network can increase and revenue and drive more users towards it. The objective of the study is to improve the interface, drive more users, to satisfy stakeholders and also to increase revenues of the company. Therefore to meet the aforementioned objectives, following are the recommendations to the company. Renren should come up with a different interface, that is, it should try to give a total make over to the interface. This will help them to get rid of the tag ‘Facebook clone’. Therefore altogether, it will give a new identity to the social network. Renren is only available in Chinese language and therefore it creates a barrier for the company to drive international users towards them. Hence it is recommended that the company should launch an English version of the website. This will allow the company to cater to international users as well. It is also recommended that the company should try to integrate more number of applications, such as online games etc. This will help them to embrace a new segment of customers. Now in order to increase the revenue of the company, it is recommended that Renren should tie-up with online retailing companies as well as other companies and can work with them as a promoting media. Conclusion The report was about analyzing the Chinese social networking website, Renren. The study revealed that Renren highly imitates Facebook and even it is also signified as the ‘Facebook-clone’. The study also revealed Renren has been a huge success in the markets of China. The primary sources of revenue for the company come from online retailers and also the other companies that place advertisements on their website. The study also pointed that Renren has large number of differences with Facebook. On reviewing the website, it has been found that the interface is extremely light and it also offers various online applications. The differences are mainly in the form of applications and also in few technical areas. However one of the biggest drawbacks of the company is its language barrier. The website is only available in English and that restricts foreign users to access the social network. Hence it has been recommended that the company must incorporate English language on their platform to attain new customer base. References China Internet Watch. (No Date). China’s Social Networking Site Renren. Retrieved from http://www.chinainternetwatch.com/tag/renren/. Edgar-online. (No Date). Management’s Discussion and Analysis of Financial Condition and Results of Operations. Retrieved from http://google.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHtmlSection1?SectionID=7910184-340749-552927&SessionID=v1EaHvrxjHH0Xz7. Facebook. (No date). About. 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