Surfbook - Successful Business due to Its First Mover Advantage in the Australian Social Networking - Example

Business Proposition of Surfbook

Executive Summary

The rise of smartphone and internet usage has opened up new areas of business. The objective of this report is to prepare a business proposition and marketing plan for a social networking application called Surfbook. This application is targeted at the users who are surfing enthusiasts or professionals. It has been designed to help build a virtual community of surfers who are able to communicate and interact with each other. The business venture is dependent on the revenue generated from the advertisements posted by the marketers. It has been concluded that the social networking application Surfbook can be quite popular among the targeted users, owing to its first mover approach and the high popularity of surfing in Australia.

Table of Contents

Introduction4

Market Opportunity4

Identifying the unmet needs of customers5

Identifying specific customer segment6

Evaluating advantages in respect of the competition6

Assessing the firm’s resources to deliver value6

Technological availability of the market6

Specifying Opportunities in specific terms7

Assess the attractiveness of the opportunities7

Proposed Business Strategy7

Value Proposition8

The online offering8

The resource system9

Revenue Model10

Cost structure10

Customer Interface11

Marketing Communication and Branding12

Implementation12

Metrics13

Exit Strategy13

Conclusion13

Reference List15

• Introduction

The global business market is characterized by constant changes, especially marked with the increase in the competitiveness and rapid changes in the market demand (Einav et al, 2014). The advent of internet has also played a major role in defining the way in which the firms run their operations (Barnes and Hunt, 2013). The traditional marketing techniques are now being increasingly replaced by the digital marketing techniques which uses internet to communicate and engage with the customers (Oh, Ozkaya and LaRose, 2014) .The rapid increase in the internet and smartphone usage has made it easier for the marketers and firms to offer enriched services and value propositions for the customers (Internet World Stats, 2016).

This paper is based on the business and marketing plan of a hypothetical mobile application for sea surfers called Surfbook. Surfbook is based on the Australia and it availability is currently limited within the national boundary only. The application has been designed in an effort to create a highly streamlined social network of sea surfers. The report contains the assessment of the market opportunity, the underlying business model, the customer interface, the marketing communication, the implementation process, the metrics and the exit strategy.

• Market Opportunity

Identifying the market opportunities in one of the most vital activities for the firms so that it can design its value propositions accordingly and to make sure that it aligns with the needs and preferences of the customers. It also helps to assess the external environment of the industry in which the firm operates and to make managerial decisions accordingly. The market opportunity analysis has been conducted based on the following model.

Figure 1: Assessing Market Opportunities

Source: (Rayport and Jaworski, 2002)

• • Identifying the unmet needs of customers

According to the reports of Roy Morgan Research (2015) the number of surfers in Australia has increased over the years as sea surfing has surfaced to be one of the most popular outdoor activities for the people in Australia. Furthermore, as stated by Tourism Australia (2016) that the surfing in Australian beaches has also become quite popular in a global scale that attracts a large number of tourists every year (Surfing Waves, 2016). However, despite of the increasing popularity of sea surfing in Australia, there is not specific social networking service or portal that is dedicated to this segment. According to Roper (2014) the social media portals that are available in Australia are not specific in terms of targeting its users based on their sports preferences such as sea surfing. This as a result underpins the fact that the surfers in Australia will most likely to welcome a new social media portal that is specifically dedicated to them.

• • Identifying specific customer segment

The Surfbook is specifically targeted to the users, who are sea surfers and are quite enthusiastic about the sports activity. In terms of demography the users who belong to the age group of 18 to 35 years of age. This population group is also quite socially active and conversant with smartphones and social networking applications (Brenner and Smith, 2013). However, this segment is not the customers of the company, Surfbook as they do not contribute to the revenue generation. The customers are the advertisers and third party firms that can post ads on Surfbook for the target audiences. In this context the customers will be the companies selling surfing accessories like surf boards, related apparels, sports and energy drinks, etc.

• • Evaluating advantages in respect of the competition

Currently there are no social networking applications that are specifically targeted at the sea surfers of Australia (Roper, 2014). This as a result will give the Surfbook a first mover advantage in the market. It will help to create a strong and close community of surfers who will be able to socialize though the application and to organize surfing events and competitions. Moreover, the features and attributes of the application will also be highly streamlined for the users that will act as a competitive advantage.

• • Assessing the firm’s resources to deliver value

According to the studies of Wood (2014), the IT sector in Australia has shown a steady growth over the past few years and is expected to follow the trend in the near future. This as a result will allow the company to recruit budding programmers and application developers from. The candidates will be recruited as interns and full time employees. These employees will acts as the valuable resources of the company.

• • Technological availability of the market

Australia is one of the technologically advanced nations in the world, with a robust IT and telecommunications sector. According to ABS (2016) the total number of the internet users has shown prominent increase in the past years. Currently the almost 99.3% of all internet connections are broadband. Moreover, the report has also suggested that the total number of mobile internet users have also increased over the past three years. This indicates that the technological availability to favour the launch of a new social networking application is quite adequate.

• • Specifying Opportunities in specific terms

The company Surfbook is targeting to attract the relatively younger generation of Australia to create a community of surfers. The large number of surfers in Australia will help the company to easily create a social network that will eventually become popular among this generation. Moreover, the increasing trend of social media usage can also be leveraged by the firm to attract the users. This in turn will make it easier for the company to offer a large audience base to its prospective clients or customers.

• • Assess the attractiveness of the opportunities

Owing to the first mover advantage Surfbook can have multiple opportunities in the near future in terms of its expansion. It can eventually diversify its business as a surfing company by collaborating with other partners. In order to make it easier for the users to use the application, it will be made available for all the major smartphone platforms such as iOS, Android and Windows Mobile. The company will also launch a browser version of Surfbook that can be accessed from either desktops or other mobile browsers. Over time the developers will add more new features in Surfbook to attract new users .

Based on the assessment of the opportunities, it can be stated that the company can take the final decision of launching the social networking application Surfbook.

• Proposed Business Strategy

This section discusses about the proposed business strategies of the company based on the following model.

Figure 2: Components of a Business Model

Source: (Rayport and Jaworski, 2002)

• • Value Proposition

The value proposition can be considered as the benefits that have been offered by a company to its stakeholders, especially the customers. In this case the value proposition of the company is targeted at the customer who the third party business houses and the advertisers who are seeking to adopt social media marketing (Huang and Benyoucef, 2013). The popularity of the application will increase owing to its streamlined focus on the surfers and the addition of several unique features like the wave alerts, notification for surfing competition, and other common features like uploading photos and videos. This in turn will help the company to offer a wider audience base for the business customers.

In terms of customer segmentation, the company will attract the companies who are directly associated with selling surfing accessories and other related goods such as energy drinks. These companies will also include firms whose product and service offerings are youth centric and are will find the user base of Surfbook quite relevant. In perspective of the user segregation, it will focus on attracting the young population especially the surfing professional and enthusiasts.

The application will be made user-friendly so that it can be used by all the individuals irrespective of their age group or demographic background. Anyone who can use a smartphone will be able to use the application (Lin, Fan and Chau, 2014).

• • The online offering

The offering of the Surfbook application is to create a community of surfers, and to provide them with all the features of a social media such as content sharing and engaging in a conversation. It will also allow the users to integrate with other popular social media platforms like Facebook, Twitter and YouTube. This as a result will increase the utility for the users. The ability to interact with other surfers will also enable them to create small groups and arrange surfing events and competitions among them. Apart from that the application will also provide a weather alert which is quite important for surfing.

The application will be designed in such a way so that it can run seamlessly in all the smartphone irrespective of the internal hardware of the devices. The application with have very low system requirement so that it can be run on almost any smartphones.

• • The resource system

This section discusses about the core benefits that the company seeks to offer and the related resources that the essential to deliver those benefits.

Core Benefits

For Users

For Customers

• Surfbook has been designed to be highly user friendly and completely free to use for the users.
• It allows them to easily communicate and interact with other surfers.
• It helps to easily build up community based on identical sports preferences.
• Helping to build a better and more connected society.

• Ability to reach out to a large audience base based on their preferences.
• Since, the users of Surfbook will have a very specific set of personal preferences, so it will help the marketers to target them based on their value offerings.
• The surfing companies will be mostly beneficial to gain access to a large number of potential customers in one place.

Figure 3: Resource based business model

Source: Authors’ creation

The above model has clearly highlighted the business model and how it will operate. The developers and programmers will develop the application Surfbookbased on the requirements of the company. The application will then be launched for the general public. The advertisers and the marketers will be offered with attractive advertising rates that will help to generate the revenue.

• • Revenue Model

The revenue of the company will come from two distinct sources. One of which is from the advertisements and the other is from the sale of merchandises. The primary source of income of Surfbookas a social media platform is from the advertisements posted by the marketers and the third party firms. The companies will be given the option to reach out to the audiences based on their age group, location, hobbies, personal preferences, etc. This advertisement rates will be based on the number of audiences the marketer seeks to expose its advertisements to. The popularity of the Surfbook will increase its user base, which in turn will enable the company to offer more target audiences to the marketers, thereby generating more revenue.

The second source of revenue will develop when the company will diversify its business model will enter in the surfing accessories business. Surfboard can use its popularity and its database of thousands of surfers to offer them surfing merchandise and other related products. Thus, the sale of the products will also help the company to generate revenue for them.

• • Cost structure

Expenses

Year 1

Year 2

Renting office space

$10,000

$ 10,000

Purchasing hardware (PCs and software)

$5,000

$0

Recruitment Cost

$500

$200

Salaries

$50,000

$60,000

Digital marketing communication

$5,000

$6,000

• Customer Interface

The customer interface is the front end section of the system that runs the Surfbook. The application is connected to a secured third party server that will store all the user data securely. It will give the option to the users to selectively keep their personal information private or make publicly visible. The user interface will have two key areas: one is the wall stream and the other is the profile. The profile will consist of the personal information about the user that he or she wants to share with others. The wall stream will show the recent updates from different users from the friend list or the joined communities. The application will also have a push notification option that will let the user know about any updates or messages from the application.

Socializing with other users can be done by sending requests to add them in the friend list. The users can create or join groups, organize events and invite other people in them. The overall interface will be themed ocean blue to highlight its focus on surfing. Minimalistic designs such as sea waves and in-app animations will also be present to give the users a more engaging experience with the application. The attractiveness of the application will be in its design and ease of navigation though different pages. The application will also have a section to make live chats will friends or groups. In the near future the application will open a separate section that will be focused on selling surfing accessories to the users. The users can make wall post from their profile, that will be visible to others people who are in the friend list. The central idea behind the user interface is to make sure that the users can be kept engaged in the application so that the amount of exposure of different advertisements can be measured.

• Marketing Communication and Branding

The marketing and branding strategies will be completely based on the digital marketing techniques and will include banner ads and social media marketing. In order to increase the user base of Surfbook, the company needs to have a strong marketing strategy to attract the users towards the application and convince them to use it. In order achieve that the company needs to create a strong awareness in the digital media. It will post banner ads in popular website with high traffic of young people. Moreover, YouTube will also be used as a chief promotional media by posting videos and paid advertisements.

Attract: The company seeks to attract the young generation of people though social media platforms like Facebook, YouTube, Twitter, Instagram, etc. The idea of community building will be used to attract the surfers.

Engage: The users will be made to engage in the application by making the user interface quite attractive. Including location tagging services and allowing them to chat in groups or in private, will make the application more use for the surfers (Bao, Zheng and Mokbel, 2012). They will be able to post suggests for favourable surfing locations, or news about any upcoming competition.

Retain: The application needs to be constantly updated to add new features so that the users can be retained and the competitive advantage can be maintained.

Learn: The company needs to learn about the users and their preferences that has not been met. Learning about their preferences and the issues faced by them will open new rooms for development in the application.

Relate: In order to motivate the users to join Surfbook, the company needs to design its communication messages in such a way so that they are easily relatable to them. This as a result will help to create an emotional motivation for the users to use the application.

• Implementation

The following Gantt chat shows the implementation process of the business strategies that have been discussed above.

Activities

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Recruit employees

Design Application

Develop Application

Attract Users by marketing communication

Attract Marketers

• Metrics

The application launched by the company needs to be evaluated on the basis of several parameters, which are as follows:

• Cross Platform availability
• Seamless performance
• Detection and elimination of bugs
• Ease of navigation
• Option for users to provide feedback
• Visual appeal of the interface
• Regular updates for constant improvements
• Exit Strategy

The exit strategy has been designed in case the company decides to discontinue the business operation. In such case the firm will take an attempt to sell the company to the right bidder and distribute the return among the major internal stakeholders.

• Conclusion

Surfbook can prove to be a successful business venture owing to its first mover advantage in the social networking sector in Australia. The study has revealed that the company has significant opportunity in the market as the surfing practices and its popularity in Australia is quite high and is increasing in steady pace. Surfbook as a social media application has been designed to attract the younger generation, especially the surfing professionals and enthusiasts in Australia. The utility of the application is based on its ability to allow people creating close communities of likeminded people who all like to surf on a regular basis. In terms of revenue generation, the firm will attract marketers and advertisers who can post targeted advertisements in the portal thereby allowing them to attract potential customers. The success of the application launch can be evaluated by assessing the change in the number of users and the average time spent by them. Thus, it can be emphasized that the business proposition of Surfbook will help the company to foster long term sustainability and growth.

• Reference List

ABS, 2016.Internet Activity, Australia. [Online] Available at: <http://www.abs.gov.au/ausstats/abs@.nsf/mf/8153.0/> [Accessed 12 May 2016]

Bao, J., Zheng, Y. and Mokbel, M.F., 2012,. Location-based and preference-aware recommendation using sparse geo-social networking data. In Proceedings of the 20th International Conference on Advances in Geographic Information Systems. pp. 199-208.

Barnes, S. and Hunt, B., 2013. E-commerce and v-business. London: Routledge.

Brenner, J. and Smith, A., 2013. 72% of online adults are social networking site users. [Online] Available at: <http://www.senioragency.be/wp-content/uploads/2013/08/SOCIAL-MEDIA-WITH-ADULTS.pdf> [Accessed 12 May 2016]

Einav, L., Levin, J., Popov, I. and Sundaresan, N., 2014. Growth, adoption, and use of mobile e-commerce. The American economic review, 104(5), pp.489-494.

Huang, Z. and Benyoucef, M., 2013. From e-commerce to social commerce: A close look at design features. Electronic Commerce Research and Applications, 12(4), pp.246-259.

Internet World Stats, 2016. Internet Usage Statistics. [Online] Available at: <http://www.internetworldstats.com/stats.htm> [Accessed 12 May 2016]

Lin, H., Fan, W. and Chau, P.Y., 2014. Determinants of users’ continuance of social networking sites: A self-regulation perspective. Information & Management, 51(5), pp.595-603.

Oh, H.J., Ozkaya, E. and LaRose, R., 2014. How does online social networking enhance life satisfaction? The relationships among online supportive interaction, affect, perceived social support, sense of community, and life satisfaction. Computers in Human Behavior, 30, pp.69-78.

Rayport, J. and Jaworski, B., 2002. Introduction to E-Commerce. London: McGrawHill

Roper, P., 2014.Most popular social media platforms in Australia. [Online] Available at: <https://www.marketingmag.com.au/news-c/most-popular-social-media-platforms-in-australia-june-2014/>[Accessed 12 May 2016]

Roy Morgan Research, 2015. Surf’s up! (For young women and 50+ folks, at least). [Online] Available at: <http://www.roymorgan.com/findings/6202-surfs-up-for-young-women-fifty-plus-201504222329>[Accessed 12 May 2016]

Surfing Waves, 2016.Surfing Wave. [Online] Available at: <http://www.surfing-waves.com/atlas/australasia_pacific/australia.html>[Accessed 12 May 2016]

Tourism Australia, 2016. Surfing in Australia. [Online] Available at: <http://www.australia.com/en/articles/nat-surfing.html> [Accessed 12 May 2016]

Wood, P., 2014. Australia's technology sector outpacing US, UK: report. [Online] Available at: <http://www.smh.com.au/it-pro/business-it/australias-technology-sector-outpacing-us-uk-report-20140731-zyzs1.html>[Accessed 12 May 2016]