Presentation Discussion Assignment
jusleag1510
presentation.pptxfacebook: Competitive Advantage
Company Background
Facebook is a social networking site
Founded by Harvard Graduate:
Mark Zuckerberg in 2004
“Facebook’s mission is to give people the power to share and make the world more open and connected. 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.”
www.facebook.com
Founder/Developer Innovations
Mark Zuckerberg’s characteristics and high profile are similar to Apple’s Steve Jobs
Users are more attracted, willing and loyal in using Facebook when its leader promotes positive value and image such as philanthropist and charity efforts
Facebook’s innovation in its interface and functionality are one of its competitive advantage in maintaining dominance in the competitive social media industry
Competitive Advantage
Facebook is the leading social media platform in the U.S. and internationally based on number of active users
Facebook has the highest percentage of users on every age group compared to other social media platform
This is the main competitive advantage of Facebook that lead to extended advantages over other competitors
Integrates well with various third party platforms
Competitive Advantage: Massive User Base
http://www.socialmediatoday.com/content/global-digital-social-media-stats-2015
5
Access to Users Preference
Access to users’ preference through information provided by user on Facebook is the strongest competitive advantage of possessing mass user base
Marketing effectiveness is achieved through targeting users preferences and frequency of site usage and visits
Facebook advertising revenue had steadily increased over years (see Revenue slide)
Revenue
Strategic Planning
Facebook should maintain and expand its group and type of users (as shown in the red circle on the next slide)
Majority of its active users are in the 18-29 age range, expanding to a wider age range will be a strategy to consider going forward
50+ age range users will be one of a major group for baby boomers generation
Pinterest and LinkedIn bring more mature users because they have a clearer target and purpose that the platform serves
Instagram attracts the millennial users
Strategic Planning
Daily Log In %
Age group of Main User
18-29
30-49
50-64
High
Low
Porter’s 5 Forces
Power of Customers/Buyers
Bargaining power of customer is low. If network use is reduced in the future, advertisers will also loose business interest and they will have a larger say. Then, the power will change from low to high.
Power of Supplier
The power of suppliers is low. Suppliers are also users. If users migrates to other more appealing social platforms, the power will change from low to high. In addition, Facebook has to continue to grow footprint on both on mobile devices and on web.
Threat of Substitute
The threat is high. There are other competitors such as Google+, Tweeter etc. that have a high likelihood to replace Facebook. It is critical for Facebook to maintain dominance and stay ahead of these strong competitors.
Threat of New Entrants
The threat is high. The social media is a highly competitive industry and there is always innovation curve ahead. Facebook should improve its service in mobile space and better access its value.
Rivalry Among Existing Competitors
Competitive rivalry is high. Other competitor such as Google+ has always following behind Facebook coming up with similar products and services.
http://strategyatheinz.blogspot.com/2014/04/porters-five-force-model-applied-to.html
Industry Convergence
Convergence is inevitable to survive in social media industry.
Other media such as newspapers and publishers have changed their business model to place reliance on social media as a method to survive in business since the emerging of Internet.
Example: Facebook launched Instant Articles feature to allow publishers to host their news stories and content directly on Facebook.
http://www.forbes.com/sites/janrezab/2015/05/15/facebook-is-in-the-middle-of-the-biggest-media-shift-since-the-internet/#3e2c3612893b
Core Competencies
Facebook’s core competency is very simple, but also has many platforms. Their core competency is connecting people.
Connection Relationships:
Friends families colleagues
Business customers, potential customers, other businesses
Opportunities from Facebook:
Advertisement platform
Photo sharing (both Facebook and Instagram)
Connect while on the go (apps)
Market place where people can sell goods
Transfer money through Facebook chat
These various avenues from Facebook allows people to connect, even allowing people all over the world to communicate on their phone or computer
Facebook Demographics - 2014
Business Model
Facebook’s business model is a social media platform where 92% (11.5B) of revenue is generated from site advertisements in 2014.
Facebook, through various Apps provided to marketing entities, allow their paid advertisers to search Facebook subscribers and target the advertising by searching the many characteristics of their subscribers.
Facebook has only a few expense burdens beyond the normal cost of providing the revenue:
R&D
Marketing & Sales
Administrative costs.
Recent Performance
Sustainable Business Model
Facebook’s model is sustainable as long as marketers see return on advertising and Facebook continues to hold subscribers.
The models become less sustainable if the next hot social media platform starts to talk Facebook subscribers.
In order to not become the next “My Space”, Facebook has to invest heavily in R&D to keep separation between their business and other competitors such as Twitter while also investing in the future.
Forecast: Facebook will spend a considerable amount of R&D resources to diversify the income stream.
Team Pearl’s Position:
Facebook should prepare a plan to start charging subscribers for premium services. Now that they have a substantial user base, the price of subscription could offset the single source income stream from advertising.
Practical Examples of Key Concepts
From experience, Facebook has drawn users through “cool” and addictive functionality
Facebook used as a hiring tool to see a person’s lifestyle
Partnerships with Zynga attracted people wanting to play games – Poker, Farmville
Instagram functionality to edit and post pictures
Connecting with others by posting where you are at, immediate awareness.
You are able to instantly upload pictures at a wedding on the other side of the world and those not able to attend can be part of the wedding
Instant promotions of events
