MKT2414_Lecture 5_pdf.pdf - MKT2414 | MARKETING VENTURE CHALLENGE L E C T U R E 5 N E T W O R K E F F E C T P L AT F O R M S LECTURER GAP KIM |

MKT2414_Lecture 5_pdf.pdf - MKT2414 | MARKETING VENTURE...

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1 M K T 2 4 1 4 | M A R K E T I N G V E N T U R E C H A L L E N G E LECTURER: GAP KIM | [email protected] L E C T U R E 5 : N E T W O R K E F F E C T P L AT F O R M S
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2 A G E N D A Creating a Network Effect Business Case Study: AirBnB Ridesharing
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3 C R E AT I N G A N E T W O R K B U S I N E S S / P L AT F O R M
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4 W H AT I S N E T W O R K A F F E C T ?
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5 P L AT F O R M B A S E D B U S I N E S S M O D E L S Platforms that bring together two or more distinct groups of customers, where each custom group represents a side of the platform. Publishers create websites Users search for information Advertisers reach users by being placed on publisher sites 3 way network effect Networked effect: value created for one side of the network depends on the level of participation in the other side of the network
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6 W H I C H C O M PA N I E S H AV E S T R O N G N E T W O R K A F F E C T ?
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7 B A R R I E R S T O A D O P T I O N - " P E N G U I N P R O B L E M ? " hungry penguins gather at the edge of ice .. but, no one wants to be the first to dive for food due to fear of predators.. so they wait until they are sure the other will join to search for food Big problem: No one moves unless everyone moves, so no one moves.
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8 B A R R I E R S T O A D O P T I O N - " P E N G U I N P R O B L E M ? " "backing the wrong horse" abandonment risk hold-up risk integration risk favoritism risk relationship risk competitive risk coordination risk - "catch-22;" each side does not participate until they are confident that will be enough users not he other side trust risk - establishing that the platform is trustworthy
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9 S T R AT E G I E S F O R A C H I E V I N G A D O P T I O N 1. Exploit a specific segment . . S O . . S O
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10 S T R AT E G I E S F O R A C H I E V I N G A D O P T I O N 2. Provide incentives; refer a friend program
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11 S T R AT E G I E S F O R A C H I E V I N G A D O P T I O N 3. Subsidize/Reward early adopters free storage to start
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12 S T R AT E G I E S F O R A C H I E V I N G A D O P T I O N 4. Provide backwards compatibility (against competition) V S .
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