Marketing Strategies - Facebook - Research Paper Example

Topic: The Marketing Plan 1The product 3 1Initial attributes 3 2Market and product development 3 3Usercomparison 3 2The market 4 2.1Overall market 4 2.2Target market 4 2.2.1Demographics 4 3Environmental Analysis 4 3.1Market strategy 4 3.2Societal 5 3.3Economic conditions 5 3.4Market threats 5 3.5Competitors 5 4Marketing strategy 6 4.1Advertisements 6 4.2Functionality 6 4.3Distribution 6 5Consumer decision process 6 5.1Problem recognition 6 5.2Evaluation 7 5.3Choice and outcome 7 6Sales projection 7 7References 8 1 The product Facebook which has its headquarters in California is an online service that allows its user to network online and its title is derived from a popular expression for the yearbook which is handed to learners in a number of the universities in America (Laudicina, 2012). 1.1 Initial attributes The networking service was established on the 4th of January, 2004 by Mark Zuckerberg together with his roommates and some of the student she schooled with at the Harvard University. The membership of the web page was originally restricted to Harvard Learners but it was later extended to include institutions that were around Boston as well as the Stanford University. 1.2 Market and product development Nowadays, Facebook allows everyone who is over thirteen years of age and anywhere in the globe to join and become a member even though no proof is needed. The company faces competition from other companies that operate in the social media space which provide tools to enable sharing of information (Friedrichsen and Mühl-Benninghaus, 2013). 1.3 User comparison It is also in competition with companies the develop applications especially mobile applications which imitate distinct capabilities that include sharing of photos as well as messaging and some of Facebook’s competitors include LinkedIn, Google+ and Twitter etc. 2 The market 2.1 Overall market Facebook has grown to be more valuable than Amazon in terms of the market value with a market capitalization that is in excess of USD 170 billion compared to the market capitalization of Amazon that has decreased to below USD 165 billion. From the previous earnings report, the social media company beat revenue estimates and realized more revenue from mobile advertisements which now account for a big percentage of the total advertisement revenue. 2.2 Target market Almost sixty-five percent of the users on Facebook are older than thirty-five making the average over forty while the users who are less than twenty four years of age make up only fourteen percent of the users. 2.2.1 Demographics Of the total Facebook users, sixty percent are female and almost fifty seven percent have finished one form of college education or another while less than a quarter have a bachelor’s or a graduate degree. The social presence of Facebook is seen in 137 countries which is more than all other social networks that are in only 127 of these nations. The US has the highest presence on Facebook even though only a half of the population uses the social networking site. India and Brazil are the Facebook markets that are steadily growing (Treadaway and Smith, 2012). 3 Environmental Analysis 3.1 Market strategy The opportunities available in the mobile industry for Facebook are huge and the company has a chance to grow in terms of users, increase its engagement and also grow its monetization. 3.2 Societal Advertisements on the network that target the people on mobile devices have the potential of fetching the network huge revenues and as a result of the plethora of information that is received from the members, it is able to send advertisements that interest the particular users making them have the option of charging more for the advertisements than other companies. The platform that has been developed by Facebook is engrossing making users spend considerable periods of time on the website and this allows the company to have a higher charge for advertisements. 3.3 Economic conditions On the other hand, there are threats associated with the company that include the investor confidence that dwindled after the IPO disaster which resulted in most of the investors losing confidence in it as an investment. Also, other companies such as Google+ and Twitter have recognized the successes that Facebook has enjoyed and thus have tried to capitalize on the growing trend with most of them recording significant degrees of success. 3.4 Market threats The investors who owned shares in Facebook sold off their shares on Facebook with the expiry of the lock-up and even though some merely wanted to close out the position which was profitable, it exhibits the decrease in confidence the investors have in the future of Facebook by selling their shares at depressed levels. 3.5 Competitors The main competitors of Google which are publicly traded include Google and LinkedIn. Google is a company that is larger and more diversified and they established a social network that was aimed at enabling them become established in the market. LinkedIn also operates a social network though their pays more attention on business men and women as an instrument to connect them to potential customers as well as employers. LinkedIn is different from Facebook since the services it offers are premium and the customers have to pay for them. 4 Marketing strategy 4.1 Advertisements As it endeavors to improve the quality of the advertisements it carries, Facebook is also striving to make changes to the method it uses to roll out products (Treadaway and Smith, 2012). While the company rapidly introduces advertising formats, it decided to take its time with the video advertisements that it developed to avoid coming up with a product that would not be effective or one that would disrupt the experience of the users. 4.2 Functionality Facebook also came up with functionality that enables merchant websites to embed the Like Button that it owns. When users continue to browse the internet and “like” different websites or products, they consequently like Facebook. Thus the company was capable of developing a rare utility that was able to track the level of product acceptance by the customers as well as their preferences. 4.3 Distribution This has enabled the company to have a first-mover advantage, develop an increased user-base and strengthen the brand which has consequently given the company the upper hand. 5 Consumer decision process 5.1 Problem recognition As far as Facebook is concerned, the advertiser is the company’s customer since it is the advertiser that makes payments to Facebook to use their platform. From Facebook’s filing for the initial public offering of the company, it stated that from its USD 3.7 billion in revenue, USD 3.1 billion was realized from social advertising. 5.2 Evaluation Even though the company has some leverage when engaging in negotiations with its customers which has enabled them to increase the mean price of the advertisements, several issues such as new entrants, the inability to increase users or drop old ones as a result of platform fatigue as well as substitutes still influence the decision making of the customers (Lynch, 2010). 5.3 Choice and outcome With the increase in substitutes and competition, the bargaining power of the customers increase making Facebook have to work harder to retain the existing user base through the provision of better experiences. 6 Sales projection Earnings Est Current Qtr Jun 14 Next Qtr Sep 14 Current Year Dec 14 Next Year Dec 15 Avg Estimate 0.32 0.34 1.43 1.83 No of Analysts 40.00 40.00 41.00 42.00 Low Estimate 0.28 0.29 1.23 1.42 High Estimate 0.38 0.39 1.58 2.33 Year Ago EPS 0.19 0.25 0.88 1.43 Revenue Est Current Qtr Jun 14 Next Qtr Sep 14 Current Year Dec 14 Next Year Dec 15 Avg Estimate 2.80B 3.00B 11.86B 15.65B No of Analysts 38 38 42 41 Low Estimate 2.66B 2.75B 11.38B 14.05B High Estimate 2.97B 3.19B 12.55B 18.75B Year Ago Sales 1.81B 2.02B 7.87B 11.86B Sales Growth (year/est) 54.50% 48.70% 50.70% 31.90% 7 References Friedrichsen, M. and Mühl-Benninghaus, W. (2013). Handbook of social media management. 1st ed. Heidelberg: Springer. Laudicina, P. (2012). Beating the global odds. 1st ed. Hoboken, N.J.: John Wiley & Sons. Lynch, J. (2010). Rhapsody players. 1st ed. [S.l.]: Lulu Com. Treadaway, C. and Smith, M. (2012). Facebook marketing. 1st ed. Indianapolis, Ind.: John Wiley & Sons. Read More