When we start a business or a new brand, it is essential to aim for a long-term payoff for all our efforts and investments — A sustainable ROI. One of the ways to achieve that is to strive for getting maximum value from each customer(higher Customer Lifetime Value(CLTV)) — It means the brand should look for developing loyal customers.
The first step in building a loyal customer base is to position your brand inside a consumer’s mind that is called Brand Positioning. It is called the consumer’s perception of a brand with respect to competing brands.
The ways to enter their mind is
a) Becoming a leader in an existing product/service category(It would need massive investments in money, effort & time and not a practical option)
b) Becoming first in any new product/service category. In other words, you need to create a new listing.
Coke is the first cooldrink to enter the consumer’s mind under the Cola category. Seven-up is the first cooldrink under the Un-cola category. Redbull is the first cooldrink under the ‘energy drink’ category. Xerox is the first brand under the ‘photocopying’ category.
If you plan to create a new category, then the first place to start is to decide your target customers. It implies that the business has to choose a niche market.
Finding a Niche Market — The general rule is to start small. Focus on a particular need, work on it, make your product distinctive, and dominate the niche market. Narrower the segment, it is easier for the entire company to focus and meet the customer needs, wants, and desires. Once you become a leader in the niche market, you could grow your market.
1.0 FACEBOOK’S NICHE MARKET
From his school days, Zuckerberg had been building web applications with social components. He loved solving problems through programming. He always wanted to be occupied with some challenging projects.
At Harvard, Zuckerberg developed web applications called Coursematch, Facesmash, Study-aid, Six Degrees, and Synapse. Course match and Facesmash were runway hits.
Solve A Customer’s Pain — Zuckerberg did Coursematch to help students pick classes based on who else was taking them. It went viral. Hundreds of students used the program and found it very useful. The web application met one of the user’s hidden needs.
A product or service should enter a market to solve a problem.
The success had prompted Zuckerberg to explore opportunities.
THE STORY OF CHOOSING A NICHE MARKET
The Exposition — Harvard had a student register called Facebook, featuring primary information and photos. Every year, the institution customarily printed the directory. Studying those photos on the list was a frequent recreational activity for most of the students.
(Earlier, Zuckerberg illegally used the data from that directory for developing his Facesmash application and faced disciplinary action on account of breaching privacy).
The Rising Action — Several students were requesting the institute to publish the student directory on the internet — An online Facebook. They felt that an electronic Facebook for the entire college would be both helpful and entertaining for all. Though the institute agreed principally, the project never took off.
The Denouement — Harvard’s student newspaper, Crimson, also supported students’ views. In one of the editions, they wrote that if a student could create Facemash, there was no reason a programmer couldn’t build a Facebook. The article laid out likely user requirements for such a website(It helped Zuckerberg when he was developing the Facebook). The newspaper also emphasized that the students should have control over the sharing of their information. The editors added that the best way would be to let the students upload the data themselves. Crimson also wrote that Zuckerberg would have avoided disciplinary action in the case of Facesmash if he had limited the application to students who would voluntarily upload their photos.
The Solution — Zuckerberg, being a student himself, was aware of the needs of fellow friends. So, he was already thinking of creating an online directory based on authentic details about students. Crimson’s editorials came at the right time and gave him valuable inputs. With those inputs, Zuckerberg began his journey of building the Facebook website.
Zuckerberg took several elements from his earlier works such as Facemash, Coursematch, and Synapse for building the website. He also adopted some features from a famous social networking website of that time, Friendster.
The Journey — Thus, in February 2004, Zuckerberg and his friends launched Thefacebook.com. It’s target customers were students from Harvard University who had Harvard.edu email address. People joined the site through invitation only. After launch, the site encountered a viral explosion. Thefacebook became the main topic of discussion in Harvard dining halls, classes, and other meetup places.
After the initial success, Zuckerberg opened Thefacebook to students at Columbia University on February 25, to Stanford the next day, and to Yale on the 29th. Everywhere, the website continued its viral growth. Later, Zuckerberg extended to other colleges and universities.
So, initially, Facebook’s niche target customers were young students from elite universities and colleges — The Millennials.
Why Millenials Were The Right Target Segment?
Millennials were a precious demographic, and they have played a critical role in Facebook’s success.
- For succeeding in any business, the primary rule is to have a sound knowledge of the target customer’s needs, pains, and desires. Zuckerberg, being a student himself, was well aware of the other student’s needs, likings, dislikings, and other factors. It helped him in designing a site that not only met student’s needs but also spoke in their language.
- Millenials mingle and interact with fellow students more than any other market segment. The college has the right environment for socialization. Any student would be within two or three degrees of everybody else on a given campus. A social network’s user experience depends on the number of known people joining the website.
- Millennials are open to a greater sense of adventure — They would happily explore new products/services.
- Millennials are also called as Digital Natives as they grew up interacting with the virtual world. So, they would find it easier to use a Facebook website than any other segment.
- Millennials are trendsetters. The Early Majority segment follows what millennials do.
- In college, most of the millennials develop life-long habits. When a company onboards a customer who is in college, it means that they have got a life-long customer.
Zuckerberg was fortunate in choosing millennials as a target segment.
2.0 CREATING A CATEGORY & VALUE PROPOSITIONS
After choosing the niche customer segment, it’s time to create a category to establish positioning.
Creating A Category — A category is defined based on the brand’s value propositions. So, what value propositions did Facebook offer in the beginning? How were they different from other social networking sites?
2.1 COMMUNICATION TOOL
When Zuckerberg launched Facebook, he wanted the site not to be a dating site like Friendster but a communication tool for the students.
Facebook’s initial objective was to help people share information at Harvard. Students could inform the happenings within the campus, about the courses, parties, study materials, and other essential things. Several people created study groups for classes. A few students used the site to arrange meetings for clubs.
Facebook also helped a student to host status messages about himself/herself so that his/her friends could keep track of him/her.
However, as more users joined the website, the value proposition began to evolve. Within a few months, another value proposition became the core of Facebook’s offerings. Let’s see about that.
2.2 SELF AND SOCIAL IDENTITY
Bowerbirds, one of the amazing creatures on our planet, could be found across the forests and shrublands of Australia and New Guinea. They are famous for their unique courtship behavior, where males build an elaborate nest and decorate it with sticks and visually fascinating, brightly colored objects(rare to find things). The nests vary in different shapes and sizes. Some of the structures rise to nine feet off the ground.
The Bowerbird works hard in differentiating the nest from other nests by decorating it through painting and arranging the objects. These nests serve only one purpose — to attract females. They will not be used by females to lay eggs or raise young ones.
The nest is a way of showing the male’s uniqueness among its peers to the potential female bird. The bird is in a rat race to build an identity and show it off.
THE IDENTITY — We, humans, are also in a rat race to build a nest of social status, a unique identity & show it off to others to attract power, favor, or mate(s) and all our public purchases/consumption/behavior is a way of achieving those goals. Facebook exploited this evolutionary behavior of humans.
The social networking website sold an identity — It allowed everyone to build a nest of social status and broadcast it off to people. It’s not about what Facebook can do for the customer, but what customers can do with Facebook.
A person may say that he or she buys things for personal enjoyment or personal needs and not for showing off but research shows the opposite.
Though Zuckerberg started the Facebook project as a communication means(a way to help people share more at Harvard), users began to use it as a tool for Self Expression — They recognized that they could project multiple aspects of their self, hitherto unknown to other people.
How did a user build an identity on Facebook? — Even though the earlier website didn’t have enough tools or features, people found creative ways to project a better version of themselves.
- Photos — Students hated their photos in Harvard’s directory that was taken by college photographers. It had below-par light and was unattractive. On Facebook, they had the freedom to decide what kind of image they wanted to share. The students began uploading and changing their photos frequently. Most of them chose images in a way to reinforce their identity. Friend’s responses to those photos had also increased their self-esteem.
- Profile — Profile information was another element that helped in constructing an identity. It allowed students to broadcast information about their work, political thoughts, hobbies, favorite books/shows/movies, relationships, nicknames, and other details. It was a tool that projected one’s likes, dislikes, and desires.
- Status Message — Another feature that students used extensively to steer and strengthen the identity was Facebook’s status message. Most of the students creatively used it to relay a political opinion or humor or practical information or life experiences or something else about self. More than any other feature, the status message became an essential ingredient in building the identity.
- Comments — Users also made conscious choices about what to comment on friends’ profiles and status messages as it had to be consistent with the identity they were trying to build.
- Competing For Friends — Initially, when a student joined, he/she found that the visible extension of his/her social network conferred a higher status to his/her identity. So, students competed for friending as many as people. He/She also realized that tweaking the profile would help in attracting more friends. Let others be proud to become friends with you. So, students spent considerable time in building/updating the profile.
Through the profile information, photos, and status messages, students constructed a self and social identity. It revolved around what he/she thought about who they are and how others should judge them.
For a student, Facebook was about showing the world about him/her and how he/she is different from others.
Identity For Adults — Though Zuckerberg opened Facebook to other user segments, the core value proposition of building an identity remained the same.
My Identity — I’m a designer, part-time business strategy blogger, husband to a scientist, doting father of a young girl, home-maker, and avid reader. When I meet other designers, I discussed only Design. When I meet marketing people from other companies, I have discussed business strategies and not design. My daughter’s friends’ parents have seen a different side of me. But on Facebook, everything is revealed. All my multiple identities merged into a single identity.
Facebook is about revealing one’s true identity. When people argued that adult users should have both a work profile and a fun social profile, Zuckerberg replied, “The days of you having a different image for your work friends or co-workers and for the other people you know are probably coming to an end. Having two identities for yourself is an example of a lack of integrity.” He also believes that by openly acknowledging who we are and behaving consistently among all our friends, we will help create a healthier society. Zuckerberg adds that people will be held to the consequences of their actions and be more likely to behave responsibly.
CONCLUSION — So, the preliminary niche market of Facebook was Millennials and College Students. The initial value proposition was communication, which evolved into allowing users to build a Social and Self Identity.
AVAILABLE ON AMAZON -
References: The Facebook Effect by David Kirkpatrick, Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne, Positioning: The Battle Of Mind by Al Ries and Jack Trout, What is Strategy-HBR Article by Michael E. Porter.