SOCIAL NETWORKING AND TRACKING
Introduction
Social Networking and tracking is a new innovation in the market. There are companies that perform these functions but with different perspectives. As an entrepreneur, the steps taken to establish and enterprise contributes a lot to its success. For an innovation idea to grow and bear fruits, a market research has to be successfully done. Carrying out a market research in the social networking and tracking industry is very essential for any aspiring investor in this industry. Being one of the recent industries it is marked by stiff competition from the providers of similar services, dominant players and so forth. This research has to involve assessing prospective competitors’ weakness and strengths and carrying out an industry analysis. This paper is a market research report, outlining the market size, marketing plan, business plan and financial plan for an upcoming business in the social networking and tracking industry. Our company of choice is Ice Breaker. We are going to compare the company with at least two of its competitors in the market so as to be able to predict the future performance of the industry.
Brief description of the system
This system uses the location based tracking interface that can be implemented in social networks. The tracking interface can also be used as standalone application. It can determine customer location and then alerts the customers depending on their profile matches. The matches could include: activities/promotions that are available around some specified locations. This system also has an application that will allow users of the system to post their location and interests. Once this has been posted, the application will send them an alert of their possible interest and activities which are available around their current location.
Mergers and Acquisitions in the Social Networking and Tracking Industry
The Social Networking and tracking sector is one of the fastest growing sectors in the Information technology industry. There are few competitors in the market who are striving to outmatch each other. Currently there are about five major companies offering the same services. Each of the companies is formulating a strategy so that it can outpace the other competitors in the market and gain supremacy. Small companies have been on the wrong side of market prowess. In order for the smaller companies to gain supremacy and be in a position to compete effectively with the market leaders, there is need for them to expand their scope of operation. One of the best ways to implement this is through mergers and acquisitions. This is a strategy that deals with buying, selling, dividing and combining different companies and similar entities that can aid or finance an enterprise so that it can grow rapidly. There has been a series of Mergers and acquisitions in the social networking and tracking industry. Most of the social networks and tracking networks existed in isolation as units. With the advent of new technology and business opportunities, social networking has been combined with tracking services so that one company can offer both. Ice breaker for instance is projected to come up as a result of a merger being anticipated between three companies in the Social networking and tracking industry. This is as a result of a strategy to make the three companies compete effectively with the market leaders like space, facebook, twitter and Yelp.
Recent major mergers and acquisitions in the Social Networking Industry
Most of the successful social networking companies have been able to gain their positions as a result of mergers and acquisitions. The following data shows some of the major mergers and acquisitions in the industry.
Acquisition of MySpace
In order to increase their services and expand further, ad network Specific Media has acquired MySpace. This social network has been struggling in the past few years. The company was valued in billions but was acquired for only $35 million. The ad network company acquired Myspace in an attempt to revitalize its operations and make it a market leader in the social network a position it previously occupied.
The graph below shows the frequency of use of different social networking sites in the past one year. (Courtesy: Pew Research Centre)
Source: Pew Research Centre
The low performance of Myspace has made it lose many members and hence become a less popular networking site. This is the key factor that led to its acquisition by the ad network Specific Media Company.
The graph below shows how the number of visitors in Myspace had decreased. The decrease in the number of visitors to Myspace resulted into its value deteriorating as it was no longer profitable but had started becoming a liability. This led to the company being acquired for only $35 million as opposed to the amount of money it was initially bought for of $580 million by News Corporation.
Source: Pew Research Centre
Market Sizing
Market sizing is an element of market analysis that involves determines the size, volume and the potential of the target market. This process also involves determining the market volume which gives a reflection of the totality of all realized sales volume of the target market. This volume is largely dependant on the number of consumers in the market and the corresponding demand levels. In determining the market volume, quantity and quality measures are utilized. These variables include the market price and quantity, and power capacities among other variables. Market size is further determined by utilizing data from government sources, trade association sources, and financial information sources or even by doing customer surveys.
The methods used in marketing sizing are the traditional methodologies like considering the demographic trends, psychographic trends, past sales trends and consumptions rates, competitor brand shares, price movements among others. Alternatively modern research methods can be used; these involve assessing market from different angles to approximate the potential market share. This approach shall involve identifying the competitors competing for the customer the organization will be serving, the demographics and psychographics of the target customers, the market factors that can influence the market size like government regulation, market consolidation in related markets, and price variations for raw materials among others. It also involves carrying out case studies of markets that have experienced similar transformations, and customer adoption rates in target market.
There are several companies in the social networking sector which command different percentages of the market. Different social networking sites command a different percentage of the market as shown in the graph below.
Top 10 Social Networks by Market Share
Source: Pew Research Centre
Marketing Plan
The marketing plan represents an important element in the business plan, as it establishes how the entrepreneur will effectively compete and operate in the marketplace (Luther, 2011, p. 45). It lays down the strategies and enables the entrepreneur to assign costs to theses strategies, which in turn serves a vital function in establishing the budget for the venture and making the necessary financial projections.
The marketing plan gives short background information about the organization, its strengths and weaknesses, information about competitors, discussion of opportunities and threats in the market place. It then lays down the objectives and goals for this entrepreneurial venture for the next twelve months. It finally gives information about the specific marketing strategies that can be implemented, the budget to be adhered to, the persons responsible for monitoring the firm’s activities all with a purpose of fulfilling the goals and objectives. Marketing plans are also guides for implementing marketing decisions and should be prepared annually before any decision is made concerning production, financial resources required personnel change among others.
Our marketing plan shall have six major sections that is the purpose and business situation, the target consumer or market including the opportunities and strengths, goals and objectives, the benefit of the product we are offering (internet security software), the positioning of the business, marketing tactics action program including its implementation, the marketing budget, and lastly monitoring the progress of marketing actions.
The Purpose
The purpose of this marketing plan is to maximize business profits by providing the best and effective social media and tracking services at the most affordable and pocket friendly prices. The target customers are both companies and individuals who rely on the internet for the success of their businesses. We are going to lay more focus on how the social media can be used for marketing and how the social media can influence the performance of different types of business.
The Opportunities
The opportunities in this market are presented by the frequent use of internet and the urge to maintain a close relationship between the businesses and their customers. The opportunity is also presented by the increasing technologically development which changes the trend to be internet reliance. Threats are presented from these opportunities due to hackers who gain access into different accounts of the users of the networking sites.
Positioning
Positioning refers to identity in the market place, and how the entrepreneur wants the competitors to view his products or services. Positioning is based on the benefits offered, the customers and how competitors are positioned. In this case this firm positions itself as the most efficient social network service provider. Some of our strategies which are meant to propel us even further include the use of: real names during registration which makes our sites more reliable and creation of fan pages that can allow celebrities and corporate organizations to organize for forums.
Marketing Techniques
Specific marketing techniques to be used to reach target customers include advertising, sales promotion, public relations, uses of circulars and brochures, classified ads, Direct mail, free samples, frequent buyer programs, networking, yellow pages, telemarketing, newsletters and outdoor signage. The use of advertisements is to include both online and offline methods of advertising.
Promotional Strategies
Use of free registrations for new members is also likely to be a boost to promoting the site. Once a person becomes a member, he/she can also gain access to free downloads of certain types of software that can be used for different purposes. The fees to be charged for using our website for advertising are also lower than that being offered by other companies. Once the costs are low and the quality is not compromised, then there is likelihood that the company will become more popular than expected.
Financial Plan
The financial plan is a plan for spending and saving future income by allocating them to various types of expenses like rent and reserving some of it for short-term and long-term savings. This plan can be in from of financial statements’ and a budget. The financial plan contains information like the costs of getting the business up and operating. These expenses include the business registration fees, the licensing permits it needs to acquire from the relevant authorities, the starting up stock and equipments, the rent deposits, the down payments on assets and properties it will use. The information in this section also includes down payment on equipments, utility set up costs and operating expenses. The operating expenses encompass salaries for the entrepreneur and other staff, telecommunication expenses, utilities, storage and security expenses among others.
Competitor Information
We have several competitors in the industry some of which have properly established themselves in the industry for a very long period of time. Most of our main competitors enjoy a large percentage of the market share. We have however acquired crucial information about their strategies, strengths, weaknesses and future plans in the industry. This will enable us also to strategize and know on how we can counter the challenges that they pose to us.
The major competitors in the industry are: Facebook, Twitter, MySpace and Yelp. These companies have a big number of members. They use different strategies so as to ensure increased performance in the industry. The strategies include:
Product or Service Strategies
Most of the companies offer free registration services to their members and then charge some small amount of money for using their sites for advertising. It is only facebook that gives the users an opportunity to use real names. We have also implemented the use of real names so as to make our company more reliable. The company is also going to charge lower fees for the services offered without compromising on the quality. This is an attempt to have a bigger number of clients.
Pricing Strategies
Major pricing strategies are customer based pricing, price differentiation in which certain products are specified for certain types of customers. In our case prices are not discriminatory whereby anyone can obtain the same product at the same price no matter who he is or where he is.
Product or Service Strategies
- Facebook Beacon – For allowing information from external websites into facebook in form of Newsfeed. It was apparently shut down in 2009 due to security concerns.
- Facebook Connect/social outreach – Connecting with friends and relatives
- Facebook Groups – Creating groups with common interests
- Facebook Inbox – Sending private messages
- Facebook support – Providing help services to users
- Facebook News – For constant updating on current affairs
- Twitter Marketing system
- Internet marketing Consultation
- Twitter Account Management
- Private Teleseminars and webinars
- Customized twitter backgrounds
- Online search capabilities – Acts as internet search engines
- Community (Local online community) by combining local reviews and social networking
- Listing for businesses and accept reviews
- Application Programming interface (RES and JSON)
- Advertising Programs
- Pricing Strategies
- Facebook Monetization – They provide adverts which are charged on per click basis and fixed basis
- They charge a small fee for posting advertisements on the page. The rest of the services are free
- Offer free services so as to attract their customers. They charge some small fee to the enterprises that wish to use their site for advertising.
Distribution Strategies
The site is accessible at any location in the internet. It can be accessed from any place across the globe.
The site can be used by anyone on the internet. They have members all over the world hence its increased popularity
The site is commonly used by businesses and people in the United States of America. It is not popular outside America.
- Promotion Strategies
- Going slow and steady
- Direct contact of fans
- No Spam
- Educational Experience
- Using coupons and other incentives
- Emphasize mobile subscriptions
- Posting entertaining statuses
- Offering free registration services
- Advertising through internet search engines
- Has free software that can be downloaded from the site
- Low costs of advertising to attract more companies to advertise
- Freed registration services for new members
- Low maintenance cost
- Strengths & Weaknesses
- Strengths
- Clean layout – the layout is easy and accessing different sections of your profile is easy
- Tabbed browsing – allows you to open new pages as you can still access the previous page.
- Integration of wall and minified
- Facebook Notes
- Weaknesses
- New look of facebook is full of bugs
- Initial teething problems whereby people could access other people’s walls and manipulate information there.
- Harder to customize
- Harder to judge by first impression
- No short cut on the profile page
- Restricted viral protection
- Applications cannot be shared with friends
- Flash distractions
- Strengths
- Gets lots of publicity
- Has no competition in microblogging as it is unique
- Simple but powerful
- It is free to use
- Has a strong brand name
- Provides authentication for other applications
- Has developers constantly creating applications
- It is real time
- Has no advertisements
- Weaknesses
- It is down quite often and therefore needs more horse power
- Limited API calls
- Unequal distribution of tweets
- Has low retention rate of about 40% only.
- Strengths
- Offers effective communication
- Offers market share leadership
- Weaknesses
- Anonymous nature thus allowing for posting of illegitimate reviews by competitors
- Has an over leveraged financial position
- It is not diversified
- Has a weak management team
- Weak real estate
- Has a weak damaged brand.
- COMPETITOR A – FACEBOOK
- COMPETITOR B – TWITTER
- COMPETITOR C - YELP
Conclusion
In order to have some ideas grow into reality, there is need to carry out a thorough research related to the idea. Once the research has been carried out a person can easily establish if the idea can be implemented or not. A great business idea cannot be properly implemented if a comprehensive market research is not done. The market research should include researching on the market size for the previously existing companies, formulating a marketing plan, business plan and a financial plan for the new business idea. This will help in determining the financial feasibility of the idea.
References
Berkun, S. (2010). The myths of innovation. Sebastopol, CA: O’Reilly Media.
Luther, W. M. (2011). The marketing plan: How to prepare and implement it. Boston, MA:
AMACOM Div American Mgmt Assn
Pride, W. M., Kapoor, J. R., & Hughes, R. J. (2008). Foundations of business. Boston, MA:
Cengage Leraning.
Savage, M., & Mimoso, M. S. (2011, July 1). Information security market consolidation: A
mixed bag. Retrieved from
http://searchsecurity.techtarget.com/magazineContent/Information-security-market-
consolidation-A-mixed-bag
