Strategic market expansion path en

SocialMediaX

The

Strategic Market Expansion Pathapplied for the international market expansion of a

social media network

‘The path is the goal.’

SocialMediaX

Is market expansion of social media (SM) required?

Yes!19.11.2015

Dragosh Christian OTTO

dragoshottoATgmail.com2

‘the future of the remaining social networks is uncertain.’

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Can you make it ‘wrong’?

Definitively!19.11.2015 3


dragoshottoATgmail.com

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Expansion market selection is critical

• Low resources

• Feedback loops back to the market of origin (Backhaus & Voeth (2010) Internationales Marketing; S. 86ff.)

• Network effects influences the future expansion. Additionally „First mover advantages“, high „switching costs“,

and „winner-take-all“ effects (vgl. Porter (2001) Strategy and the Internet)

19.11.2015 4Dragosh Christian OTTO


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Decision model

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Goal

Resources(financial, human,

informal, etc.)

StrategyTarget

Markets



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Agenda

1. Goal (What do we want to achieve?)

2. Strategy (Selection process.)

3. Wrap-up



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1 Goal

• Generally each company wants to earn money!

• SocialMediaX is a „social media platform“ which delivers valuable crowed sourced

information about X by payed ads. maximising ad revenues

efficiency.



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User(s) User(s)

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Ads paying company

1.2 Business function model



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1.3 Scaling alternatives

• Convince ad placer companies/entities that their un-accessed

customers (users) will click them if their message and offer are

consistent (theoretically).

• Convince users to value and use the social media platform and

attract by this ad paying companies which now believe that the

specific customers are directly addressable (Facebook-strategy,

proved).



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1.4 The

‘Four-Strokes Social Media Scaling Strategy’

Ad customers

Users

Overcome Inhibitors Demonstrate Promoters

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Scale

( ]

Expand

Earn

Reach

[ )(START)



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2 The

‘Strategic Market Expansion Model’ (SMEM)

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A decision process which considers

goal(s),

the business function model (slide 8),

the four–stroke social media expansion scaling strategy (slide 10),

the market-score (market ‘value’, slide 13),

the market-distance (slide 14),

available resources (slide 16-17), and

strategic priorities (slide 16-17)

and delivers an customizable, transparent, and empirically based

strategic market expansion path.



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2.1 Profitable market filtering

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po

ten

tial

ad

cu

sto

mer

s

potential users



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2.2 Market scoreE

xte

rna

l p

ersp

ecti

ve

Challenge

PROMOTE THE ADDED VALUE

FOR THE EARLY ADOPTERS

(USERS)

OVERCOME INHIBITORS (e.g.

AWARNESS), ADDRESS EARLY

MAJORITY (USERS)

PROMOTE THE ADDED VALUE

FOR THE EARLY ADOPTERS (AD-

PAYERS)

OVERCOME INHIBITORS (e.g.

AWARNESS), ADDRESS EARLY

MAJORITY

(AD-PAYERS)

Intervention

(cost/benefit)

Give users reach, fun, tools, let

them shape the co-network

(open/crowed innovation), etc.

Invest in user marketing (research

expectation, react/fulfil, events,

recommender-systems, etc.)

Promote effectively users to ad-payers

products/services, beacon ad

customers (proof of concept),

convince stakeholders and

multipliers(associations, NGOs), etc.

Invest in marketing, become generally

more valuable than your competitors,

demonstrate that it is not only a

chance but a requirement to be your

customer, etc.

GoalReach and convince the (new)

market early adopters.Develop critical mass of users. Earn $.

Earn more $ (become profitable)

and develop your customer base as

well as product/business model.

Inte

rn p

ersp

ecti

ve

Intervention

(cost/benefit)

Implement the business model towards the

user (on the local market).

Develop and structure the (local market)

organisation and determine specific

standardized processes and initiate cash

inflow structures.

Implement an profitable (market specific)

cash-inflow system.

Streamline the (local market) organisation

and plan next development interation.

Goal(Re-)Initiate a working business on

the specific market

Efficient (local) user market

processes

(Re-)Initiate working ad-customer

processes

Efficient (local) ad-customer

market processes. Business model

iteration development planning

Score

(normalized)

*toy example

-0.10(cost)

-0.50(cost)

-0.20(cost)

+1.00(benefit)

User-no./

Ad market size(normalized)

-0.60 0.80

+0.20(market score/value)

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ScaleExpand EarnReach

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2.3 Market distance

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IT

RO

NL

AG

US

FR

DE

UK

ES

JP

CH

AU

Distances are the measured effort/cost to enter a market from a specific other market (arrows)*. Here the

network effects and feedback loops are considered.

Diameters are the market scores (see slide before).

* Generally it exists a distance from each market (circle) to each market (circle). However, for clarity not all are displayed here.



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2.4 Strategic Market Expansion Model

(SMEM)

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IT

RO

NL

AG

US

FR

DE

UK

ES

JP

CH

AU

Parameters:

1) Diameter – market score

2) Distance – effort/cost to enter a market from a specific other market (arrows)

3) Strategy

a) Fast expansion -> minimum spanning tree/path (optimisation problem)

b) Cheap expansion -> shortest path problem (optimisation problem)

c) Regional expansion (compromise between 1 & 2) -> Steiner tree problem (optmisation problem), etc.Dragosh Christian OTTO


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2.5 Fast/greedy expasion

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IT

RO

NL

AG

US

FR

DE

UK

ES

JP

CH

AU(Start)



Parameters:



3) Strategy



c) Regional expansion (compromise between 1 & 2) -> Steiner tree problem (optmisation problem), etc.

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2.6 Cheap/bootstraping expansion

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IT

RO

NL

AG

US

FR

DE

UK

ES

JP

CH

AU(Start)



Parameters:



3) Strategy



c) Regional expansion (compromise between 1 & 2) -> Steiner tree problem (optmisation problem), etc.

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3 Wrap-up1) For social media networks international market expansion is required.

2) Network effects, and feedback loops must be considered, so finding the best expansion sequence

is not a trivial problem.

3) A successful market access strategy is the ‘Four-Strokes Social Media Scaling Strategy’.

4) For each market determining an market score is possible by using standard empirical evaluations.

5) Markets have different access costs/distances relative to each other.

6) The Strategic Market Expansion Model (SMEM) uses the market score, the relative market

distances and the strategy as parameters in order to determine the Strategic Market Expansion

Path.

19/11/2015 18Dragosh Christian OTTO


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