Technology Strategy – Case Study
1a) What is foursquare’s business model and value proposition? Business model:
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. Value proposition:
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 batches, the app also enables users to establish a personal profile and see who is around; through this, it creates opportunities for meetings and social exchange. This option is not only available for friends but also for total strangers – it therefore provides visitors of a city with the ability to easily meet locals with similar interests and extend their social network. Moreover, foursquare creates value for travelers and visitors by displaying insider tips, reviews and recommendations from other users. It also enables users to bookmark their favorite places for later revisits and to create a to-do list with places to visit, which provides a motivation to come back after a visit. The last part of the value proposition is based on the linkage foursquare provides between consumers and venues: Foursquare members can benefit from promotions at certain venues, such as discounted or free drinks. Value proposition to venues:
The venues benefit from the possibility to create and shape their company profile that is displayed on foursquare, through which they influence the perceived image of their venue. In addition, it provides them with free advertisement and increased exposure. Venues also have the benefit of being able to attract new customers by offering promotions and to retain loyal customers by providing incentives for regular visits. 1b) What strategic moves and critical business choices explain its growth to date? Before foursquare, the co-founder Crowley already developed Dodgeball, a service that enabled people to inform all their friends nearby by text message about their current location. After selling it to Google and several years of working on the service, Crowley left Google in 2007. When Google shut down Dodgeball in 2009, he decided to build a new application based on the features of the discontinued program. In the following, we will highlight the most important strategic moves and critical business choices that explain the success of foursquare so far:...
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
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