Marketing Strategy of Google Inc.

How did Google succeed in building a worldwide brand from nothing, in just a handful of years?Which is the secret of Google unconventional business model?

How was Google able to reach a capitalization of over $350 billion, with such limited results in terms of revenues and profits?

How was Google able to win out all its competitors - Yahoo, Lycos, Altavista, Excite, Infoseek - in the years between 1998-2001, when Google was a young, small company with just 20 employees?

Was it just thanks to an algorithm?Or did Google succeed due to the essential user interface, a completely different choice from the cluttered interfaces of its competitors?

or something else?

Analysis

Google Inc. was founded by Larry Page and Sergey Brin in 1998.In 2001 was the #1 Search Engines.

In just 3 years, from scratch, as a start-up, Google attained the world leadership in the Search Engines market,And in the following years - from 2002 to 2013 - Google strenghtened its leadership position, becoming - as a matter of fact - the undiscussed world dominator in Search Engines.

Search Engine is the key asset in the online world.

But Google today is not just the #1 search engine.Google Market CapitalizationIn 2013 Google Inc. is the 3rd biggest US corporation, considering stock market capitalization, with $350 billion.

By comparison, in December 2013: Yahoo stock market capitalization was $40 billion,Microsoft $320 billion,

and, to give some reference outside of the information technology world:

General Electric stock market capitalization was $270 billion, JP Morgan Chase $210 billion,Citigroup $150 billion,Goldman Sachs, the Wall St. powerhouse, $75 billion, Boeing $100 billion,Lockheed Martin, the biggest military contractor of the Pentagon, $44 billion, Exxon, the biggest oil company in the world, $420 billion.

In terms of stock market capitalization, Google is 5 times Goldman Sachs, and 8 times Lockheed Martin.Google Inc. Stock ValueAt the IPO in August 2004 Google share price was set at $85.

Most financial analysts criticized the choice, as they judged the stock price seemed eccessive and unreasonable. As the markets opened, the Google Inc. stock immediately jumped to $120.

In 2005 the Google Inc. stock were above the $400 mark.In 2013 Google Inc. topped $1000 at the NASDAQ.

A tenfold increase in less than 10 years. An excellent return for Google shareholders. Numbers speak for themselves.

The key question is:How was Google capable to achieve such extraordinary results, and in such a short time?

The answer is a complex one, and involves multiple factors. It's a combination of smart decisions, a highly innovative and risky business model,great products, excellent marketing strategy, financial backing, great advisors.

We need to start by analyzing the search engines market situation at the time Google Inc. was founded, back in 1998.The top players at that time were Yahoo, Lycos, Altavista, Excite, Infoseek.We need to point out that in 1998 internet connections were terribly slow,compared with today's standard, and waiting times for the pages to load were unnerving.Most users were having dial-up connections, with effective speeds typically in the 10kbps - 40kbps range.

Today, in 2013, we enjoy ADSL connections one thousand times faster, 6Mbps to 20Mbps are typical, not to mention high speed optical cable connections.

In 1998, Yahoo, Lycos, Altavista, Excite, Infoseek were all having heavy and cluttered home pages, which, with the slow internet connection of the time, were causing waiting times of 20 to 60 seconds for the page to load. Today, 5 seconds waiting time is considered an eternity.At Google, the founders Larry Page and Sergey Brin were well aware of the issue.

Moreover, it needs to be reamarked that search engines were not making any money,in terms of revenues and profits.They were all typically operating in deep red, and their primitive business model was based just on the wishful thinking that perhaps one day the profits would come.Most revenues were coming just by banners and advertising on their online pages. (which, by the way, were causing the loading time to slow down even further).

It has to be remarked also that the search results, from Yahoo, Lycos, Altavista, Excite, Infoseek, were not always the most relevant or interesting for the user, who was forced to hours of patient and relentless screening among the search engines results.Unsatisfaction, about search engines users, was dominant. And search engines users were already in the hundreds of millions, worlwide.

Larry Page and Sergey Brin, at Google, started with a totally different concept.

One more clue that, if you are smart, a problem can be transformed in an opportunity.A lucrative opportunity.Google Winning ConceptFirst, Larry Page and Sergey Brin developed a totally new algorithm, capable of filtering down the deceiving SEO webmasters tricks, and giving more relevant and interesting results to the user. They called it "PageRank", and while its general working is known, the exact formulas are still secret today.

Second, they decided to have a simple, clear, minimalist, essential home page - user interface, if you prefer: Just the Google logo, and the search box.

Thus, the Google home page, even at very low connection speeds, was much quicker to load than any competitor's.

These two were the winning ingredients to Google lighting fast growth and overwhelming success.

Thus, when Google started and entered the market, the situation was the following:Google had a clean, clear, essential user interface. no frills, no annoying banners, just the logo and the search box - and was easy to use and fast to load.All main Google competitors - Yahoo, Lycos, Altavista, Excite, Infoseek - were more like generalistic portals, full of confusion, full of useless features and useless links, full of annoying banner ads, heavy and slow to load, and confusing and annoying to the eye.Google had a clear understanding on psychology of perception, and how the interaction eye/brain works, while the bigger competitors didn't.Bottom line is: If the user goes to a search engine, what he/she wants to get is simply that: just a search engine. A search engine which is fast and reliable.

If the user wants a generalistic portal, he/she goes to a portal, not to a search engine.Larry Page and Sergey Brin, the Google Executives, understood this, and this was what they delivered. And made their users happy.And the other key point - in the years from 1998 to 2001 - Google had reliable search results (not always, but most of the time). Page and Brin's Page Rank algorithm worked well.

As part of the winning mix, it has to be pointed out also that the Google Inc. start-up was well financed and well advised by their Venture Capital companies, Kleiner Perkins Caufield & Byers and Sequoia Capital, especially by John Doerr, VC Partner of Kleiner Perkins, and his advisors, and assisted by Wilson Sonsini Goodrich & Rosati, the leading law firm of Silicon Valley.

But this was just the start, the first, crucial years, from 1998 - when Larry Page and Sergey Brin founded Google - and 2001, when Google won the search engines fiery war.

The following years - from 2002 to today - have been exciting and successful as well for Google.

Google Inc., in fact, developed a unique, highly innovative, unconventional and very risky business model, that proved to be successful.

Umar SaddamMBA (Marketing) 2142077E-Marketing (2nd Semester)Prof: Aasim FarookDate of Submission: Dec 01, 2014