FACEBOOK MESSENGER

RESEARCH DESIGN PROJECT

MENTOR: PROF. PRADIP SHUKLA

RESEARCHER: HIEN LE

COMPANY INFORMATION

• Facebook Inc

• Is an online social networking service founded in 2004 by Mark Zuckerberg

• Helds its IPO in February 2012, currently has market value of 160.4 Billion USD

• The second largest website on the Internet (according to Alexa, April 2014)

• Has 1.28 Billion users (March, 2014)

• Facebook for iPhone, their first mobile application was released in July 2008

ACQUISITIONS

Source: http://techcrunch.com/2014/02/25/the-age-of-acquisitions/

INTERNET INDUSTRY OVERVIEW

• Companies in the Internet Industry operate in a highly competitive environment, subject to rapid technological change.

• Barriers to entry vary, depending upon the particular markets served.

• Internet companies operate on the global stage, and results often depend upon the performance of overseas markets and currency exchange rates.

• Long-term prospects for the industry are fairly encouraging.

• Trends such as increasing worldwide Internet usage, overseas expansion, and the continued popularity of online advertising ought to further benefit companies in this industry.

NOTABLE COMPETITIVE PRODUCTS

• TENCENT QQ: 712M active users

• Whatsapp: 465M active users (acquired by Facebook: FB)

• WeChat: 355M active users

• Skype: 280M active users (acquired by Microsoft: MSFT)

• LINE: 150M active users

• Viber: 105M active users

PRODUCT INFORMATION

• Facebook Messenger

• Is an instant messaging service and software application which provides text and voice communication, developed by Facebook.

• Integrated with Facebook’s web-based Chat feature and let Facebook users chat with friends both on mobile and main website.

• First release: August 2011

• Stable release on Android, iOS, Windows Phone, Microsoft Windows, and Blackberry OS

4P >> PRODUCT

Facebook is a social networking website intended to connect friends, family, and business associates.

• Structure:

• News Feed, Friend, Pages, Timeline, Like, Messages and Inbox, Notifications, Network and Groups

• Notable features:

• Photos & Videos, Credits, Graph Search, Listen with Friends, Subscribe, Ticker, Hashtag, Events, Notes, Platform…

• Applications:

• Smartphone integration

• Slingshot

• Facebook Paper

• Facebook Messenger

4P >> PRICE, PROMOTION, PLACE

• Place

• Worldwide accessible over the Internet (partially blocked in China)

• Available on multiple devices: personal computers (PCs), smart phones, tablets…

• Price: Free with advertising

• "If you're not paying for the product, you are the product.“

• Promotion

• Started out as a niche product.

• Allow business identities build & promote their Facebook page as an integrated channel where they can generate awareness, influence consumers, cultivate customers’ loyalty, and selling products.

PORTER’S FIVE FORCES ANALYSIS (MARKET POSITIONING)

• Bargaining power of customers:

• The advertisers are their main customers.

• Facebook is still one of the most effective advertising channel in digital age.

• Bargaining power of customers is low.

• Bargaining power of suppliers:

• Internet business benefits from economies of scale.

• Facebook was blocked/ hard to access in certain countries.

• Bargaining power of suppliers is medium

PORTER’S FIVE FORCES ANALYSIS (CONT.)

• Threats of new entrants

• Facebook was started as a personal project 10 years ago.

• New startups with competing products come up everyday with very low cost.

• Threats of new entrants are high.

• Threats of substitute products/ Competitive rivalry within industry

• Users has various options to switch, varied from LinkedIn, Twitter, Instagram… to Skype, Whatsapp, Snapchat…

• Threats of subtitute products and competitive rivalry are high.

PROBLEM STATEMENT

• In April 2014, Facebook announced that the messaging feature will be removed from the main Facebook app, and all users will be "forced" to install messenger, in order to continue to send/receive messages on mobile devices, which "could be very unpopular.“

• The company does not know customers’ reception on the Facebook Messenger app and their reaction on this particular upcoming change.

RESEARCH OBJECTIVES

• Measure customers’ perception on current Chat feature of Facebook app.

• Measure customers’ perception on standalone Facebook Messenger app.

• Identify customers’ difficulties on adapting with this change.

• Identify the time needed for customers to adapt with this change.

• Identify the best way to improve customers’ learning curve with this change.

• Identify the change on customers’ perception during the transitioning phase.

RESEARCH DESIGN

• Descriptive Research method: understand user behavior on Instant Messaging applications.

• Cross-sectional studies: measure users’ perception toward a market decision.

• Continuous panels: because Facebook Inc is a multinational company with users from many countries, the survey would be designed and modified to match for each demographical area.

• Market-tracking studies: track the change in user behavior toward a market decision.

INFORMATION TYPES/ SOURCES

• Primary data

• Taken directly from the survey result.

• Secondary data

• Taken from Facebook Inc’s user database.

• Give a better picture of user demographic

DESCRIPTIVE RESEARCH DESIGN

• Type of questions will be used:

• Demographic question

• Dichotomous question (Y/N Question)

• Multiple-choice question

• Semantic differential scale

• Open-ended question

• Survey sampling: choose from current Facebook users who use at least 1 of those 2 apps: Facebook app and Facebook Messenger app.

• Question languages & styles would be familiar with mobile device owners and would NOT require excessive knowledge on technology to answer.

• Survey method: Internet surveys. Using Google Forms for pretest, Facebook built-in Survey feature for actual tests

• Using successive independent sample research design.

METHODS OF ACCESSING DATA

• Self-administered surveys (Fully Computerized Online Surveys)

• Pretest:

• Platform: Google Forms

• Actual test:

• Platform: Facebook’s built-in Survey function.

• Survey takers: Facebook users who agree to take part in this survey when asked.

DESIGN DATA COLLECTION FORM

• Type of questions will be used:

• Demographic question

• Dichotomous question (Y/N Question)

• Multiple-choice question

• Semantic differential scale

• Open-ended question

• Language: bilingual

• English

• Vietnamese

DEMOGRAPHIC QUESTION

USER BEHAVIORDevice Usage

USER BEHAVIORUsers’ familiar level with mobile connected devices

USER BEHAVIORUsers’ usage level with chat applications

USER BEHAVIORUsers’ experiences with Facebook product

USER BEHAVIORUsers’ reactions with Facebook’s market decisions

SAMPLE PLAN AND SAMPLE SIZE

• Pretest:

• At least 30 observations

• Actual test:

• Variability ( p*q): p = 50%, q = 50%

• Level of confidence: 99% z = 2.58

• Acceptable sample error: e = 3%

• n = 1849

DATA COLLECTING

• Pretest

• Survey link was created with Google Form

• I post it on my personal Facebook profile, my Tumblr page and Facebook Group of Chapman MBA ’15 and asks for my contacts to take it.

• Total responses received: 47

• Actual test

• Survey will be popped up in Facebook users’ News Feed. If they click Accept, they will enter the Survey page that has been catered to fit with users’ default language.

DATA ANALYZING >> DEMOGRAPHIC

• Pretest data may be skewed since it is collected on my peers, who share similar traits with me.

• However, demographic information can be used for further Chi-square test.

57%

43%

Gender Distribution

Male Female

2%

47%49%

2%

Age Band Distribution

Under 18 18 - 25 26 - 34 35 - 44 Over 44

DATA ANALYZING >> DEVICE USAGE

• Most people has 2 or more devices.

• Laptop and smart phone are two most popular devices to access Internet.

• Most familiar OS: Windows

1 2 3 >30

5

10

15

20

2

2018

7

Number of devices owned

Desktop Laptop Tablet Smart phone

0%

20%

40%

60%

80%

100%

38%

87%

36%

81%

User's familiar level of each device (%)

11%

40%49%

Most familiar OS

Android iOS Windows

DATA ANALYZING >> FAMILIAR LEVEL WITH CHAT APPLICATION

• Internet quality & peers effect are the most likely reason for why they use/ don’t use mobile chat application.

• Most customers recognize the cost advantage of chat application.

• Unsurprisingly, text/ photo messaging is the most used feature, but less than 50% use free/low-cost calling even though they are aware of it.

0

4

8

12

Reasons why they don't use Chat on mobile

82%

4%

14%

Free/ Low-cost awareness

Yes No I don't care

Text

/ pho

to m

essa

ging

Free

/ low

-cos

t cal

ling

Stick

ers/

Them

e0%

40%

80%91%

38%15%

Most used features

DATA ANALYZING >> USAGE LEVEL

• Facebook Messenger is the dominant chat application.

• 63% people use chat application daily.

Never13%

Once a week23%

Once a day6%

2 -5 times per day

23%

More than 5 times per

day34%

Frequency

Face

book

Mes

seng

er

Viber

iMes

sage

s

Wha

tsap

p

Googl

e Han

gout

Snap

chat

Line/

Kak

ao T

alk/

WeC

hat

Don't

use

any

0%

20%

40%

60%

80%

100% 79%

40%28% 28%

19% 13% 11% 6%

Chat Application Use (%)

DATA ANALYZING >> PHONE FUNCTIONS

• People still use phone features (calling & texting) daily but mostly at basic level.

• This may pose a potential threat on changing user habit since they don’t have saving incentive to switch to low cost options.

Yes No05

101520253035404550

Do you still use SMS function on your phone?

Less than 5 5 - 10 11 - 20 More than 200

5

10

15

20

25

30

Average daily SMS

Less than 10 minutes

10 - 30 minutes

31 - 60 minutes

More than 1 hour

0

5

10

15

20

25

30

Average daily talking time on phone

DATA ANALYZING >> FACEBOOK

• 41% use Facebook Messenger application already.

• 81% will have no negative feelings if Facebook separate Chat function completely off Facebook mobile application.

39%

20%

41%

Facebook Chat platform

Facebook Messenger application

Facebook mobile application

Web browser

Strongly support

Support Neutral/ I don't

mind/ I don't care

Against Strongly against

Ob-serva-tions

2 8 28 7 2

2.5

12.5

22.5

How do you feel toward Facebook's decision to separate Chat function completely off Facebook

mobile application?

DATA ANALYZING >> HYPOTHETICAL SITUATION

• Only 12% think they will probably got off Facebook due to this decision.

• Only 8% think they will leave Facebook because they would not like new/ updated features.

12%8%

15%

50%

8%8%

Reason that may cause they leave Facebook

I don't agree with one of their new/updated policies

I don't like one of their new/ updated features

Too much advertisement

Too much time consuming

It's outdated and irrelevant to me now

Other

46%

41%

12%

Will you stop using Facebook due to that decision?

No

Not sure

Yes

DATA ANALYZING >> CORRELATION

• We assume that users’ current platform would be correlate to user reaction toward Facebook decision, in specific:

• Messenger users will support that decision.

• Computer users, who use web browsers don’t care about that decision.

• Mobile application users will be against that decision.

DATA ANALYZING >> CORRELATION

• Looking into raw data, we have 25% of people who use Facebook mobile application answer “Yes” to question “Will you stop using Facebook due to that decision?”

DATA ANALYZING >> CHI-SQUARE TEST

• We assume that there is no relationship exist between gender and chat applications that they use, so we will test with top 5 chat applications on the list:

• Facebook Messenger

• Viber

• iMessages

• Whatsapp

• Google Hangout

DATA ANALYZING >> CHI-SQUARE TEST

PRETEST CONCLUSION

• Marketers should consider gender as one of the main factors in their marketing plan since male and female behave differently.

• They could go through with the decision since it has high supportive level from their users.

• However, they would need to have a good compensation strategy and better learning curve improving plan for mobile application users to keep them stay on Facebook.*Further research on a larger scale with an actual test will confirm or deny pretest conclusion.

Q&A SESSIONS