Creating and Capturing Value in a Social Network
SUBMITTED BY GROUP – 6 6 Sitesh Kumar Parida
15218
Manoj Kumar
15219
Abhinav Khare
15220
Neelam Kumari Kumari
15221
Rashmi Singh
15222
Arushi Agrawal
15303
Gananayak Singh
15304
Bismayee Rath
15305
Anshul Kumar
15077
Creating and Capturing Value in a Social Network Questions for discussion
1. Why do people use social networks? Social networking sites (SNS) are defined as web-based services that allow individuals to: A) Construct a public or semi-public profile within a bounded system, B) Articulate a list of other users with whom they share a connection, and C) View and traverse their list of connections and those made by others within the system. SNS basically allows users to create a personal profile and can be broken down into internal social networking (ISN) or external social networking (ESN). The former with examples such as a community within a company or associates etc, and the latter offers examples such as MySpace and Facebook. An ESN is public and available to all web users to communicate and are designed to attract advertisers although they can also be specialized communities such as DeviantArt. “People are no longer confined to social networks in the near physical neighborhoods. The bond
to family and spatially co-present others are decreasing and people actively construct their social relations, because of the relations based upon shared interests and common goals”
2. How can you segment Cyworld’s users? Which segments should Cyworld target? How can it create value for users in these segments? As we can see in the case study, during the growth phase of the company, by 2007, Cyworld had 21 million users and $95 million revenue of which $65 million from paid items (music, virtual gifts, etc.), $15 million from mobile networking, and $15 million fr om advertising. CyWorld made most of the revenue from the paid items like music and virtual gifts for their minihompys. Cyworld segments their users according to ABC segmentation in the case study:1)
Active users
2) Buyers and 3) Connectors.
As we can see in the Research of the case study, Korean and USA user choices are different about the way they preferred to interact. We can see that the choices vary as per the Geographical location. Korean users uses cyworld for connecting to their friends ,families and parties , whereas Users from US were more interested in creating events, listening to music and were not just limited to relationship Building.
With Company segmenting with ABC segmentation strategy, Cyworld should target the Active Users as well as the Buyers.
Buyers should be encouraged to engage more with their connectors. Active users should be encouraged to become buyers as well.
Behaviour of the Most Active users should be analysed with people with most number of connections on Cyworld. We would Suggest Continuous monitoring to the behaviour of these segments and an effort to try and tailor services to these segments.
Cyworld’s main focus should be on the existing market, Korea, and keeping the existing clients
and should not try to avoid focus even if the customer may fall in any category of the ABC segmentation. More efforts for retaining the users as the retained user may anytime become a connector.
Special Growth strategies should be focused for the US with more content available for the US Users such As videos, Music Files and event information which may or may not be available to the Korean Users. Some Special customized Services needs to be added for Some Users who are more focused towards Privacy of the information they share with Cyworld.
However value will need to be created by altering the existing limited offerings as it can clearly be seen in the research that these segments differ in their choices and their expectations to Social Networking websites.
3. Which is most valuable to Cyworld – an active user, a user who spends a lot of money with Cyworld or a user with a lot of connections? User with a lot of connections is most valuable to Cyworld because the main criteria to improve a social networking site is the number of connections . If there are more users then the growth will be more. The users have a network of friends. For Cyworld users take pride in having a large number of friends and it becomes a badge of honor for Cyworld. By the ABC segmentation which is Active users ,Buyers and connectors if the connectors increases then the revenues also increase.
4. How is Cyworld different from Facebook and Myspace? How are these social networking sites different from other large websites such as Amazon, Yahoo or Youtube? The biggest immediate difference between Cyworld and the other sites is market segment. Cyworld is highly popular in Asian countries, and before I received the case study I had never heard of it before, whereas Facebook, Myspace, Amazon, Yahoo, and YouTube are more commonly known to Western culture.
Facebook’s income is generated with advertising, whereas Cyworld is advertising, selling of
virtual products and music for minihompy. Facebook and MySpace have the user, centred around a network of friends and groups where they share images, videos, music etc.
Cyworld appears to be more like SIMS type virtual reality,
almost a game, where they can fictionally interact, buy gifts, and engage in such activities such as get married in a virtual setting. The difference between Facebook, Cyworld and MySpace and Amazon is that the latter is a retailer not focused on social aspect. Users can interact by rating, or commenting on products, however the intent or the connection is for transactional purposes only. Money is generated by Amazon by the sale, or the commission on the sale, whereas the others have advertisement or virtual sales income model.
Facebook, MySpace and Cyworld have all tried some form or
another of targeted advertising (which carries potential privacy infringements); however Amazon fiercely protects their consumers privacy
The difference between Facebook, Cyworld and MySpace and YouTube is in the content. Where the former three allow various forms of content sharing, YouTube is specifically designed for User Generate Content Video’s.
On YouTube you don’t need to be an active member of a
“channel” (community) to derive benefit or share an interesting video, but you can follow or
subscribe to a channel.
5. What should be Cyworld’s business model – paid items, mobile networking or advertising? Should Cyworld explore any other areas of opportunity? According to our observation, Cyworld should concentrate on Advertising as this business model is having the large st growth potential in the future with a generation of around 16% of Cyworld’s revenue in 2007,t he online advertising market is expected to have a stabilize growth and achieve a target of $2 billion by 2010. As we can see from Exhibit 10 Advertising have a hike of 30% in 2005-06 revenue and 25% hike in 2006-07 revenue which is better then the percentage rise in revenues of Price items and Mobile Cyworld. Composition of Cyworld's Revenues in 2005-07 (in US $)
Column1
2005
Paid Items Mobile Cyworld Ad Total
60%
2006
2007
% Rise in 2005-06
% Rise in 2006-07
58
67
65
15%
-2%
9
14
15
55%
7%
9.2
12
15
30%
25%
76.2
93
95
22%
2%
55%
50% 40% 30% 30% 20%
25%
% Rise in 2005-06
22%
% Rise in 2006-07
15% 7%
10%
2% 0% Paid Items -2% -10%
Mobile Cyworld
Ad
Total
Having a different approach towards introducing advertising with the idea of keeping it a clean community and making it different from Yahoo and other portals, it started programs like “Happy Clicking” generating revenue without actually paying cash, Cywor ld decided to pay its users
Cyworld money which will help its users inbuying digital items from Cyworld again helping in increasing sales of virtual items resulting in increase in revenue through Paid items. Introducing advertising based model and experimenting with brand minihompys were encouraged by the company for free digital items, company had many options for the future including Cy-TV where members could access free content in return for watching video ads.
