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Facebook Strategy Case Study

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Updated: Jul 26th, 2021

From its humble beginning in a college room, facebook has managed to be one of the leading social media sites in the world. It is thought to have surpassed Myspace.com in terms of unique customer visits and registered users. Its growth though not rapid, has been steadily rising. A number of strategies could have assisted it to attain this status. By the year 2012 facebook is reported to have had 500 million unique users on its database.

One strategy which seems to have worked for facebook is developing translated versions of the site. Originally it was only offered in English. This locked out potential users who do not speak English. After this translation customer numbers are reported to have surged upwards.

This propelled its current position as the leading social media site in terms of customer numbers. Indeed the bulk of its customers are outside the United States of America. This clearly shows that offering the site in a couple of other languages has worked for facebook.

Huge user numbers in turn can be monetized. Facebook has managed to transform this numbers with some considerable success into revenue. Facebook generates the bulk of its money from advertisement (Ajith 2010). This is through sale of advertising space and advertising displays.

The advertisers are attracted to popular sites with large traffic. By making themselves the most popular site, facebook has managed to attract advertisers in their big numbers. It also attracts other content developers like application developers. Application developers rely on big numbers to sell their products. Facebook has managed to their position as the leading social media site to attract the application developers who in turn would share part of their revenue with facebook.

Facebook has managed to endear itself to new user through their friends. It has a feature for inviting friends and sending fiend requests. This feature helps it to get new users. It is been found that people generally trust sites that people they know are already using. Facebook has managed to capitalize on this fact to increase the number of users. This is a feature that helps facebook market itself softly. To the user it looks like any other feature meant to enhance their level of satisfaction.

To continue being on top, facebook has in the recent past began acquiring other companies. It has particularly focused on acquiring small start up companies with features they did not have on their site. This will enable them to offer a wide range of content to the target users. This puts facebook at a competitive advantage over its competitors in the social media industry. One of the most sought after traits in the social media industry is user engagement.

The longer a user stays in the website the more attractive it becomes for an advertiser. Advertisers prefer sites with good engagement because this informs them of the unique traits of the user (Auer 2011). This information is in turn used to create targeted advertisements.

Therefore, acquisition of small startups with unique features helps them first to increase t engagement and secondly to lock the user up in the site. It has been argued that the advertisers value user engagement more than the actual number of users. However, both appear to be working well for facebook.

The design of the website could be helping facebook gain competitive advantage over its competitors. It is relatively easy to use. Perhaps its simplicity is strength. Many features of the site are easily visible safe for a few that the company may not want the visitors to access easily like account deactivation. An attractive website is more likely to get new unique visitors as compared to a poorly designed one.

Facebook began with a smaller market. It first targeted Harvard university students, and then students from a few other universities were included, and eventually it opened to any one older than 13 years. It has no strict geographic market. This has turned out to be its strength. First it managed to incorporate new users without dropping the old users. Secondly expansion of the target population has allowed it to have more users.

Its target market is broad as compared to some competitors like Myspace which targets mainly rock bands and their fans. A broad market offers unique business opportunities (Boyd and Ellison 2007). For instance, the composition of such a market is diverse. This is in contrast to narrow target markets whose members are more likely to share similar consumer characteristics. A broad category of users means that marketers have a wide range of people with different traits to sell to.

Activity focus is a marketing strategy that has turned out to be strength for Facebook. Facebook focuses on connecting people. It connects people on the basis of relationships, shared interests, and shared past. This has put it at a unique position in the social media industry.

Each user has friends who have something in common with them. This eases the work of marketers as one person is likely to recommend a product to their friends. Friends of users are more likely to purchase the same product. This translates to more revenue to the marketer and Facebook.

The number of advertisers using Facebook has been on the increase over the years. However, their continued use of Facebook as their platform of choice is not guaranteed. This therefore prompted facebook to seek new ways of retaining old advertisers while attracting new ones. Perhaps this could be the reason way Facebook shares some information with them for free. It shares some information classified as public information about their users with the advertisers. This ensures that they keep advertising with them.

Another strength that facebook has is enhanced user transaction. User transaction represents the number of activities a user can carry out within the site. Some innovative features offered by facebook serve to increase user transactions (Booth 2010). Features like ‘comments’, ‘people you may’, and ‘like’ are good examples.

Perhaps the most important feature to the company is the ‘like’ feature. This information can be shared with third parties for a fee. Some others like ‘search’ have also emerged. This particular feature ensures that the unique visitors to the site do not have to leave the site and use another site to search for some information of interest.

Generally Facebook has been trying to reposition itself in the market as a formidable player. It has been restructuring itself in order to boost its competitive advantage. As is evident in some changes made in the executive team, it is trying to shed the image of a start up company and acquire that of a legitimate international corporation. A good cooperate image boosts the confidence of the users and that of the business partners. A good image may in the long run translate to increased revenue.

Another potential strength of facebook is localization. Facebook has in the recent past incorporated region specific content. For example, in some markets local content and local language are used. Localization in foreign markets is important to avoid acquiring the image of an alien. In new markets competitors may use lack of local content to drive their advertisement. If a company is branded as foreign in some markets, its chances of success are significantly reduced.

Ease of sign up and provision of enhanced security filters is strength. Though competitors provide equally good features, this can be seen as strategy. Keeping up with the pace of the competitors has ensured that its features and products do not become obsolete. Allowing competitors to lead the innovation battle is a potential danger for the company.

This is because the social media industry driven by new innovations. This makes it a highly volatile market that can create casualties in a short time. It is therefore in the interest of facebook to be with the pack if it cannot be ahead of them.

However, Facebook’s business model has been criticized. It has been criticized particularly for failing to monetize its position as a market leader in terms of number of users. Facebook also has a vast amount of information on its users but it has failed to successfully monetize it. For continued profitability it has to find innovative ways to monetize this information without harming its users (Agarwal and Mital 2009). Currently it relies mainly on advertisements, content developers and sharing of user information to make money.

During the sign up process facebook collects a lot of information about its users. This information has been designated personally identifiable information (PII) (Back, et al 2010). This information highly personal its safety is of concern. Facebook is said to be home the largest collection of photographs in the internet.

It has been accused in past of sharing this information with third parties for monetary gain. This represents a big threat to its future success. This can result in massive account deactivations leading to big losses. It has been argued that facebook’s greatest enemy is itself. It has also been accused in the past for not providing the users with an option of permanently deleting their accounts.

No single strategy has proven more useful than the others for facebook. But one that had immediate impact is the choice of target market. Change of target market to include anybody above 13 years enabled the company to get more customers. More customers is seen in the advertising industry as good grounds for business. Another strategy that yielded results almost immediately is the inclusion of translated versions of the site.

This enabled it to tap into new markets where English is not spoken. This also allowed the company to include localized content in their website. Localized content has proved popular in some regions. The biggest challenge to the company strategy is the business model adopted by the company. This has led to causations of bridge of privacy agreements. Since the social media industry is changing very fast it remains to be seen what strategies the company will adopt to fit into the new environment.

References

Agarwal, S. and Mital, M., (2009), “Focus on Business Practices: An Exploratory Study of Indian University Students’ Use of Social Networking Web Sites: Implications for the Workplace,” Business Communication Quarterly.

Ajith, S., (2010), “Evaluation of Social networking sites for business application,” Mastersthesis.

Auer, M., (2011), “The Policy Sciences of Social Media,” Policy Studies Journal.

Back, et al., (2010), “Facebook profiles reflect actual personality, not self-idealization,” Psychological Science.

Booth, P., (2010), Digital Fandom: New Media Studies, New York: Peter Lang.

Boyd, D. and Ellison, N., (2007), “Social Network Sites: Definition, History, and Scholarship,” JCMC.

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IvyPanda. "Facebook Strategy." July 26, 2021. https://ivypanda.com/essays/facebook-strategy/.

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IvyPanda. 2021. "Facebook Strategy." July 26, 2021. https://ivypanda.com/essays/facebook-strategy/.

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IvyPanda. (2021) 'Facebook Strategy'. 26 July.

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