Week 6 Group Discussion - Snapchat

Snapchat from Xin XU

Snapchat Analysis

Snapchat is a mobile application where user’s chat lasts for a snap. Users can communicate with friends and other people by sending pictures and videos that automatically disappear after few seconds.

1、SWOT Analysis

Internal

Strengths:

• Privacy
• content deleted immediately after reading
• offers a more private platform to interact with others compared to other social media
• e.g. avoid parents

• Mobile-friendly Design
• sleek interface
• ‘travel mode’ to reduce data usage
• always full-screen
• always plays with sound
• Innovation
• pioneer of ephemeral messaging service
• pioneer of time-limited stories
• geo-filters
• “discoveries”
• location-specific snaps to be shared across the world
• e.g. Our Auckland Story in New Zealand, Wimbledon in the UK, Rugby Sevens in HK
• reality show
• Snapchat is planning to get an original reality TV series by partnering with A+E Networks. The company also partnered with Disney for a Bachelor recap show, and it's also working with NBC for a shrunken down version of The Voice.

Weakness:

• Controversy
• sexting
• offensive or lurid comments
• inappropriate speech made by the CEO
• racist filters
• diversity problem in the company

• Loss of Historic Data
• Information in Snapchat are only up for a 24 hour period.
• This inability to retain messages and content can be a frustrating side effect as much as a useful feature. Other social media sites such as Facebook and Twitter, allow the user to post a picture and then revisit the photo a later time.

• Smaller and Fickle User Base
• Snapchat has 150 million users. It is significantly smaller than some of the bigger players.
• Facebook is getting close to 2 billion.
• YouTube claims over a billion users.
• Most of its users are between 18 and 34 years old, and most of the activity generated on the platform comes from those under 25.
• They are discerning and impatient. Their constant desire for fresh, edgy features.

External

Opportunities:

• Expansion
• Snapchat’s growth has continued to boom
• especially among teenagers, allowing for the courting of advertisers looking to attract these consumers with vast disposable income.
• Going Public
• more money

Threats:

• Negative PR
• Many people think Snapchat isn’t a company that makes much claim to doing good in the world, not outside of making money by selling ads.
• Many people think the CEO is a frat boy and a control freak. He drive away many top executives and refuse to give shareholders any say in the company’s direction.

• Imitators
• Snapchat’s video editing tools are copied by Snow, Faceu…

• Emerging Competition
• Facebook Live
• Last year, Facebook struck multi-million dollar deals with media companies and celebrities to stream video on Facebook Live.
• YouTube Live
• YouTube is also investing heavily in its live streaming product YouTube Live.
• Twitter is also branching into stream live video.
• Instagram Stories resemble Snapchat’s discoveries very much

• Going Public
• Some investors expressed their worries about Snapchat after going public. They don’t know whether or not it will return profit or shareholder value.
• face pressure from shareholders every single quarter
• hard to balance users’ need for fresh, innovative features with investors' desire for growth and financial return.

2、Porter’s Five Forces Analysis for Snapchat

Threat of New Entrants/Potential Competitors: Medium Pressure

• Low time & cost of entry
• Snapchat’s features can be easily copied
• Minimal technology protection

Threat of Substitute Products: Low Pressure

• Privacy
• Convenience
• knowing the content will be deleted within 24 hours
• less effort needed to put into posting
• e.g. Facebook, Whatsapp, Squawk Messenger, email, text messaging

The Bargaining Power of Buyers: High Pressure

• 158M of daily active users
• Instagram Stories: 150M daily active users within 5 months
• Low switching cost
• When existing social media giants copy Snapchat’s features
• users do not need to create new profile
• users do not need to convince peers to use it

The Bargaining Power of Suppliers: Low Pressure

• Snapchat does not require suppliers to provide its service

Rivalry Among Existing Firms: Medium Pressure

• Strong emotional appeal
• constantly updated filters
• situation-specific snaps
• Recent acquisition of Bitstrips
• Bitmoji integration
• Brand loyalty
• Out of parents’ reach
• e.g. Snow, Instagram, Clipchat

3、Business Model Canvas

Value propositions

• Self-destructing messages: Photos and videos will be hidden after viewing and deleted immediately from Snapchat’s server.
• Unique Motion Stickers and Lenses to make the photo/video more funny and creative.

Key resources

• Lenses and geofilters
• Millions of DAU (daily active users)

There are multiple attractive lenses and available geofilters to improve the pictures. Plus, it has several popular channels like “stories”, “discover” with millions of daily active users.

Key activities

• Provide a platform for users to communicate and tell stories through pictures & videos

Key partnerships

• Publishers, media companies

Snapchat has partnered with publishers to provide daily news and feeds on its own platform (“discover” section).

• Bitstrips, etc.

• Investors: Alibaba

Customer segments

• Focus on the young people aged from 13 to 34, mostly female.

According to the statistics, more than 60% of 13-34 year olds in the US with smartphones use Snapchat; Snapchat is the third most popular social app among the millennials. At the same time, around 70% of snapchat users are women.

• Advertisers

Customer relationship

• Acquisition & retention

Channels

• Online channels like social media, news apps, video platforms
• KOLs eg. gigi & kendall

Revenue streams

 

• Advertising (sponsored geofilters and lenses e.g.Disney, and “discover”)
• User purchase

At Snapchat, the team that designs the consumer products also creates the advertising products. They create user-friendly and camouflaged advertisements, so that many users don’t even know that they are advertisements and rather enjoy them. For example, some sponsored geofilters and lenses are specially designed for certain locations or occasions, which can be used for advertisements.

   Besides, companies and event organizers utilize sponsored stories to promote products, while publishers show daily news and feeds in “discover” section. Snapchat took 30% of the ad revenue, if the company sold the ad space, or 50%, if Snapchat sold it.

   In addition, users sometimes need to pay a little fee to apply a filter.

Cost structures

• Fixed cost: app construction and maintenance, personnel etc.  
• Variable cost: marketing and promotion etc.

4、Eliminate-Reduce-Raise-Create Grid

(Snapchat VS Facebook)

Eliminate

• View past content

Reduce

• Discover what’s going on in the world
• Ease of use

Raise

• Digital effects creation
• Colour editing filters
• Speed (Content creation/ content viewing)
• Entertainment
• Fun of multimedia content creation & viewing
• Emotional appeal

Create

• Content deleted immediately after sending
• Collaborative content creation (uploading location-specific snaps to be shared across the world)

• Fun filters (Geolocation/ Time/ Temperature/ Speed / Altitude / Lenses / Motion stickers)
• Lens: Snapchat uses augmented reality to create many attractive lenses. This technology is comparatively new and hasn’t been used by any other in this field. Users use these lenses to change their face and voice and add humor and beauty to it.
• Marketing Use