MMI - Consumer Marketing Exercise: Product Life Cycle Analysis
As requested, in order to apply the Product Life Cycle theory into a real product, I have chosen a company which is present worldwide and which markets a very innovative and intangible product that, in my opinion, has recently achieved the Maturity Stage at the Spanish Market: The SocialNetwork Facebook. Despite the fact that analysing a technological company and a very modern product as this one may be much more difficult than analysing any other regular item or company, I decided to go for Facebook because I think it’s a perfect example of how a product that’s very subjected to trends can rapidly achieve the Mature stage and start declining soon unless it doesn’t get actualized orredefined. From now on, I will try to argue this point, but mainly with simple intuitions and personal experiences rather than with reliable data, as there is not much information available about the usage and recent evolution of this product at the Spanish market and because, as I understood, gathering exhaustive information was not either the aim of this exercise. At the conclusions, I willalso try to explain what could be done in the future by the company and where should they focus in order to maintain the current stage and delay the Decline Stage as much as possible.
According to the Life Cycle Theory, here are a few aspects of the current situation of Social Networks Market which allow me to argue why Facebook and the rest of its competitors have entered thematurity stage: Market Saturation: According to a recent study published by Ocio.net about Internet Habits at the Spanish Market, 76% of the regular Internet users in Spain join at least one Social Network, and Facebook has a Market Share of over 61%. This means that the market is already saturated, as Facebook and 7 other companies have already achieved most of the market (innovators, early adoptersand late majority). Therefore, it will be very difficult for them to continue gaining users, as -in my opinion- those who haven’t joined any of these Social Networks yet (24% of the regular Internet users in Spain) will probably never join, unless these products get renovated or these companies change their strategies. Intense Competition - Diferentation: The whole market is divided in only a fewcompanies, and there’s only place for the leaders (Facebook, Tuenti, Hi5, and My Space) and the ones that are clearly differentiated attending to the kind of product they offer (Twitter is a microblogging and Liked-In and Xing are business-oriented social networks).
FUENTE: Estudio de Hábitos de Internet en España, realizado por Red de Blogs Ocio Network SL.
ISABEL DEL MORAL REXACH
MMI -Consumer Marketing Exercise: Product Life Cycle Analysis
Therefore, as many other social networks that have been disappearing along the way, Ketete (the social network created by Telefonica) will probably end up disappearing as well, despite Telefonica’s efforts who keeps investing and investing on this product. There is also a slight brand differentiation and feature diversification betweenthe leaders: Facebook is more for young and adult people with a mediumto-high social and cultural level, while Tuenti and Hi5 tend to be more for teenagers who use these networks mainly for instant messaging with their classmates after school, while My Space is more focused on music. Sales/Usage Reach Peak Since Facebook is a free tool and we do not have information regarding the incomes of thecompany in Advertisement and Sponsorship, instead of talking about “Sales Peak” I will talk about “Usage Peak”. As I said at the beginning, I don’t have reliable data which proves this, but as a user of this social network I would say Facebook has recently reached a Usage peak and it’s now starting to fall down. If I take a look at the main section of my account which shows me a summary of the...