Strategic market expansion path en

SocialMediaX
The
Strategic Market Expansion Path
applied 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.com
2
‘the future of the remaining social networks is uncertain.’

SocialMediaX
Can you make it ‘wrong’?
Definitively!
19.11.2015 3

SocialMediaX
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 4

SocialMediaX
Decision model
19.11.2015 5
Goal
Resources
(financial, human,
informal, etc.)
Strategy
Target
Markets

SocialMediaX
Agenda
1. Goal (What do we want to achieve?)
2. Strategy (Selection process.)
3. Wrap-up
19.11.2015 6

SocialMediaX
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.
19.11.2015 7

SocialMediaX
User(s) User(s)
SocialMediaX
Ads paying company
1.2 Business function model
19.11.2015 8

SocialMediaX
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).
19.11.2015 9

SocialMediaX
1.4 The
‘Four-Strokes Social Media Scaling Strategy’
Ad customers
Users
Overcome Inhibitors Demonstrate Promoters
19.11.2015 10
Scale
( ]
Expand
Earn
Reach
[ )
(START)

SocialMediaX
2 The
‘Strategic Market Expansion Model’(SMEM)
19.11.2015 11
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.

SocialMediaX
2.1 Profitable market filtering
19.11.2015 12
potentialadcustomers
potential users
 
 

SocialMediaX
2.2 Market score
Externalperspective
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.
Goal
Reach 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.
Internperspective
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)
19/11/2015 13
ScaleExpand EarnReach

SocialMediaX
2.3 Market distance
19.11.2015 14
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.

SocialMediaX
2.4 Strategic Market Expansion Model
(SMEM)
19.11.2015 15
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.

SocialMediaX
2.5 Fast/greedy expasion
19.11.2015 16
IT
RO
NL
AG
US
FR
DE
UK
ES
JP
CH
AU(Start)
Parameters:
3) Strategy

SocialMediaX
2.6 Cheap/bootstraping expansion
19.11.2015 17
IT
RO
NL
AG
US
FR
DE
UK
ES
JP
CH
AU(Start)
Parameters:
3) Strategy

SocialMediaX
3 Wrap-up
1) 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 18

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