Technology Strategy – Case Study
1a) What is foursquare’s business model and value proposition?
Up until the point in time that the case study covers, the company did not arrive at a clear business model. They made small monthly revenues by providing special batches for partner companies like Bravo and VH1 which they charged approximately $10,000/month for. But these partnerships were rather seen as a possibility to increase brand awareness and brand credibility in order to drive up the number of users than as a source of revenue.
The CEOs were already planning to charge companies/venues for promotions they offered on foursquare to consumers but had not concluded on a defined pricing scheme yet. Additionally, they were considering customized batches and advertising banners as sources of income but decided that it was too early for these actions.
Foursquare interacts as an intermediary platform between consumers and venues. Consumers are the individuals that enter venues in order to collect points and batches. Venues are restaurants, bars and shops that are listed as locations on foursquare and that have the possibility to offer promotions as discounts to the members. Thus, we have to consider foursquare’s value proposition separately for both.
Value proposition to consumers:
The first and biggest value proposition foursquare provides to the consumers is the ability to turn life into a game. Users can collect different batches by entering venues and compete with friends and strangers in a city for the prestigious “mayor” title, the batch awarded to the most frequent visitor of a certain place or most active member in a certain city. Hence, it motivates users to go out, try new places and gather new experiences.
Closely linked to the “life is a game” value proposition is the idea of providing a social network through foursquare. In addition to competing with your friends on gathering the most
References: Brian Solis. (2008). Refining the Echo Chamber to Excel in an Economic Crisis. Retrieved from http://www.briansolis.com/2008/10/refining-echo-chamber-to-excel-in/ Piskorski, Mikolaj Jan, Thomas R. Eisenmann, Jeffrey J. Bussgang, and David Chen (2010). Foursquare. Harvard Business School Case 711-418, January 2010. (Revised March 2013.) Shapiro, C., & Varian, H. R. (1999a). Information rules: A strategic guide to the network economy. Boston, Mass: Harvard Business School Press. Shapiro, C., & Varian, H. R. (1999b). The Art of Standards Wars. California Management Review, 41(2), 8–32. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=1671231&site=ehost-live