Whatsapp

A PROJECT ON

GROWTH STRATEGY OF WHATSAPP

In The Subject

STRATEGIC MANAGEMENT

Submitted BY

SWETA PANDEY

A029

M.Com Part –I (Business Management).

Under The Guidance Of

Prof. PRERNA SHARMA

To

University Of Mumbai

For

Master of Commerce Programme (Semester-I)

In

Business Management

Year: 2015-2016

SVKM’S

NARSEE MONJEE COLLEGE OF COMMERCE & ECONOMICS

VILE PARLE (W), MUMBAI - 400056.

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EVALUATION CERTIFICATE

This is to certify that the undersigned have assessed and evaluated the project on “GROWTH

STRATEGY OF WHATSAPP” Submitted by Swetapandeystudent of M.com – part-1 (semester

1)Inbusiness management for the academic year 2015-2016.This project is original to the best our

knowledge and has been accepted for internal assessment

Name & Signature of Internal Examiner :

Name & Signature of External Examiner :

Principal

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DECLARATION BY THE STUDENT

I SWETA PANDEYstudent of M.COM PART-I (Management)(Management), Roll No.:A029hereby declare that

the project title “GROWTH STRATEGY OF WHATSAPP” for the subject STRATEGIC

MANAGEMENT submitted by me for semester – I of the academic year 2015-2016, is based on

actual work carried out by me under the guidance and supervision of Prof. PRERNA SHARMA

I further state that this work is original and not submitted anywhere else for any examination.

Place: Mumbai

Date:

Name & signature of student

Name: SwetaPandey

Signature:

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ACKNOWLEDGEMENT

Projects have always been fun learning experience, but with growing age, at this masters’ level, it

surely demands corporate and depth approach.

This project was a great learning experience and I take this opportunity to acknowledge all those who

gave me their valuable guidance and inspiration provided to me during the course of this project.

I would like to thank Prof.PRERNA SHARMA – Professor of STRATEGIC MANAGEMENT.

I would also thank to the M.com Department of Narsee Monjee College Of Commerce&

Economics who gave me this opportunity to work on this project which provided me with a lot of

insight and knowledge of mu current curriculum and industry .

I would also like to thank the Library Staff of NarseeMonjee College of Commerce&Economics for

equipping me with the books, journals and magazine for the project.

I would also like to thanks my friends and fellow students who helped me in the cause of the project

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Introduction

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INDEX

S. no. TOPIC PAGE NO  

1. Introduction 7  

2.  HISTORY  9  

3.  MARKETING REVOLUTION   12  

4.  IT STRATEGY ONWHATSAPP   14  

5. TECHNICAL 16  

  6. SECURITY   17  

  7.  PRIVACY   19  

  8. OPEN WHATSAPP PROJECT   21  

  9. WHY USE WHATSAPP   22  

  10.  SWOT ANALYSIS   23  

  11. PESTLE ANALYSIS   26  

12. GRAND STRATEGY   28  

 14. FUTURE   30  

15. CONCLUSION 31

16. BIBLIOGRAPHY 31

Way back in 1876, a revolution was created by a 29year old genius – Alexander Graham Bell, in the form of a telephone. Sadly though, both, his mother and his wife were deaf. Most of us alive today, weren’t then. But we did get to witness a similar break-through though, in 2009– WhatsApp,

With 450 million monthly users and a million more signing up each day, WhatsApp was just too far ahead in the international mobile messaging race for Facebook to catch up, as you can see in the chart above that we made last year. Facebook either had to surrender the linchpin to mobile social networking abroad, or pony up and acquire WhatsApp before it got any bigger. It chose the latter.

Facebook recently said on its earnings call a few weeks ago that its November relaunch of Messenger led to a 70 percent increase in usage, with many more messages being sent. But much of that was likely in the United States and Canada where the standalone messaging app war is still to be won.Internationally, Facebook was late to the Messenger party. It didn’t launch until 2011 after Facebook bought Beluga, and at the time it was centeredaround group messaging where SMS was especially weak.

WhatsApp launched in 2009 with the right focus on a lean, clean, and fast mobile messaging app. And while the international messaging market is incredibly fragmented, it was able to gain a major presence where Messenger didn’t as you can also see in the chart above.

Unlike PC-based social networking, there is no outstanding market leader in mobile messaging. Still, WhatsApp absolutely dominates in markets outside of the U.S. like Europe and India.

WhatsApp was much more popular than Facebook in several large developing markets, according to data from a small survey conducted by Jana Mobile and published by The Information (which requested we remove the graph of the data). In India, Brazil, and Mexico, responses were 12X to 64X more likely to say WhatsApp is their most used messaging app, compared to Facebook. Those are big countries with tons of users that Facebook needs.

It’s also impossible for Facebook to acquire certain other Asian competitors like WeChat, which is the one hope of Chinese mega-giant Tencent to have a global consumer product.

So it’s clear that WhatsApp had strategic interest to Facebook, and we know that the two talked from time to time.We made the map above using data from Onavo, another Israeli-based company that Facebook acquired for — ahem — competitive intelligence. Because Facebook scooped up Onavo for

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more than $100 million in October, we don’t have access to active usage data anymore. The only thing outsiders can see are app store rankings, which imply download rates and not current usage.

So what happened in the last year? WhatsApp looks to have pulled so far ahead of Facebook in developing markets that there was no way to catch up. Mark Zuckerberg said in a post today that the app was on its way to reaching 1 billion users.

We’ve heard Facebook has been interested in buying WhatsApp for two to three years. We reported in 2012 that Facebook was in talks to acquire WhatsApp. But over the past year, it became clear that Facebook couldn’t afford not to pay whatever it would take to get WhatsApp on its team.

So the answer to Facebook’s problem ended up being $19 billion.

Apparently, that’s what it took to take Jan Koum and his backers at Sequoia Capital ( the fund that Zuck originally spited) out of the market. If it waited any longer, that number probably would have just gotten bigger.

You might wonder how WhatsApp will ever earn back the money it cost to buy, but this acquisition wasn’t about increasing Facebook’s total revenue. It was about surviving the global shift to mobile.

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History

WhatsApp, a dream comes true of talking to a friend sitting oceans apart through radio-waves, meaning absolutely free! What used to cost a somewhere between Rs. 5-15 per message was brought down to being free by online messaging like Way2SMS.

This was still found to be cumbersome by people mainly due the involvement of internet which required logging or signing in a personal computer or laptop. This is where WhatsApp walked in to make life easy for smartphone users. It leveraged on the increasing popularity of the term, ‘Stay Connected’. Where people wanted staying in touch with their friends and loved ones for as low a price as possible, WhatsApp removed the price aspect from it. It seems this application builders leveraged on the

growing population of ‘Short message service (SMS)’.

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An invention by ‘two guys with an experience of 20 years at Yahoo! Inc.’ as per the official website, WhatsApp stirred hard the broth BlackBerry (BB) had tried to, but could only cater to BlackBerry users, in the form of BB Messenger. No wonder, the success of WhatsApp is much greater (in terms of number of users) compared to BlackBerry Messenger. It is supported by many platforms – Windows, BlackBerry, Android etc. It has even managed to enter the territory of Apple, which is otherwise difficult to cross for a non-Apple-made application.From being a multi-purpose, user-friendly, connectivity application to allowing sharing of not only messages but also images, audio files and videos, WhatsApp is a rage. The reason is pretty obvious – From downloading it to using it, WhatsApp is free!

But then WhatsApp does cost you something. It demands an internet connection, on the smartphone handset, to be in use. Just out of curiosity, I wonder then why should one not be as crazy about using G-talk or Yahoo messenger or AOL as well. Some of us must have heard of the ‘kik’ application which followed in the footsteps of WhatsApp and was a declared success. Why, all of these are free too, with the internet connection? That makes them as well equipped as WhatsApp.

What, then, distinguishes WhatsApp from the other free of cost applications?

It may be any one of the following –

1. The boom of 3G services followed by a fad for the same.Page | 9

2. The plethora of cool and funky emoticons offered by WhatsApp.

3. Adding a friend on WhatsApp is simple. Anyone who possesses this application on his/her

smartphone and is present in your contact list at the same time is connected to you via WhatsApp.

4. WhatsApp doesn’t require any ‘Sign-in’ or ‘Log out’.

5. ‘What’s up’, the on-going homonym pun, somehow makes it easier for the youth to connect with

WhatsApp (Intelligent naming).

6. WhatsApp connects with its users in more than one ways – Facebook, Blog and Twitter, riding on

the success of social networking’s popularity.

There can be a lot more than these. For some, it’s the ease of clicking the WhatsApp icon, going to the chat with a friend and seeing when was the last time he/she was seen online on the app. For others, it’s the cool way in which one can update his/her status without really bothering everyone on his/her friend list to become aware of the same by a pop-up in their respective profile

The telecom industry did not take long to realize that ‘Conference call’ was a much needed value

added service. Hence, accepting the customer demands, WhatsApp too added a fascinating feature of

‘Group Chat’ in Feb 2011. Not only is it easy to create a group on WhatsApp, it is equally easy to quit

the group too.WhatsApp has constantly been adding more and more handsets to its kitty over the time

and informing users of the same through its website and blog.But fame is a double-edged sword. And

so it happens that there has been a rumour taking some rounds; recently there was a hoax about

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WhatsApp charging a fee for its usage to the users whose screen logo did not turn red.It was on

declared on WhatsApp’s blog and everywhere else on the internet that the apparently alarmingmessage

was a fake one.Whether this was a marketing gimmick by the parent company or an attempt to kill

competition by someone else is for the users to figure out.

Marketing Revolution

Whatsapp Marketing is one of the platform for any business owner to promote his product. You get direct access to your customers. The most used messaging cross platform application by people since it’s launch. So today are going to have a look on WhatsappMarketing strategies, so that small business owner can take the opportunity. I guarantee you, you will be cracking more sale once you start using Whatsapp Marketing for your business promotion.

Gone are the days of email and SMS marketing, now what we are talking about is the fastest and reliable promotional weapon for your business named Whatsapp. If you are aware of TRAI rules, you must know, you can not send messages to DND numbers. So what does it mean? It means SMS marketing is a waste now. What else? You are talking about Email marekting?

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Well how many of the advt. emails you have reply since you started using your first email account? I doubt you ever did. This is what exactly am talking about. Email marketing is waste if you haven’t done your homework right.

Let’s not go there, we’re here to talk about Whatsapp only. So how does it work? How you can promote your business on Whatsapp. And what if you want to send your promotional message to thousands of potential customers. How to do that? Because Whatsapp do not allow to add that much of numbers at once and it is impossible to send the message to 1 thousand numbers one by one manually? So how it will be done?

Here you are: First off take a glass of water, site back and relax. I will explain each and everything.  We are, Web development and Online marketing solution providers in India.We’ve have been into many major development project like WordPress core contributors. And this time we’re introducing Whatsapp Marketing for Small Business owners in India.

So what we actually do is, set up a campaign to promote your business to the list of number, either provided by you or by us (It’s totally up to you). Now we got a bot which is attached to Whatsapp’s official version. We then be loading your promotional message and in in a few minutes that message will be hitting everyone’s Whatsapp app. Click here to know more about our Whatsapp Marketing service.

Prices are really low, Many IT Company, Hotels, Writers, and Small Businesses are have used our Whatsapp Marketing Service. They get new clients every day and their revenue is been increasing day by day.

We also offer an additional service for Whatsapp Marketing customers, if you are interested increasing your conversion rate and ROI. We also provide ROI Management Service.

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IT Strategy On WhatsApp

WhatsApp has been a major contributor of 25% decline of SMS in Spain. Chinese We Chat has over

300 million users. Over 90% of Korean smart phone users use Kakaotalk. These are just a few

examples of the rising trend of the mobile instant messaging (MIM).

Instant messaging as such is not a new thing (remember ICQ?), but there are certain reasons why it has

had its resurrection now:

1. Phones are increasingly more about data than talking

In developed countries nearly every new phone sold is smart phone. Smart phones are

increasingly more about being smart than phone. There is app for that, now also for the basic

phone features (talking and texting).

2. That data is getting faster

New 4G LTE (Long term evolution) phones will enable high-speed data for mobile phones.

This opens new opportunities for what kind of content we can exchange in MIM platforms.

3. Facebook is so huge that it is already mass broadcasting 

If you are average Facebook user sending your status update, the odds are that the message will

be seen by your family, friends and colleagues plus countless of people you do not even know

about. This is great, but serves more of people´s need for vanity and instant recognition. The

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most meaningful conversations happen with the people you know. Same phenomenon has been

also reason for the success of Path.

4. There is always need for 1-to-1 communication

Some might argue that Facebook message does the trick. However the challenge is that

Facebook is already flooded with so many messages, it is not that reliable way to catch people

(at least not all of them). Phone has been relevant for so long because you can be quite certain

that your message is received. Although Facebook has increased the number of “friends”, it has

not really increase the number of “real friends”. The amount of those real friends is limited and

many of interactions with those people we want to keep private.

Facebook Messenger VsWhatsapp Messenger in 2012

5. World is getting smaller 

Majority of MIM applications work internationally. The bread and butter of Telcos profit

margins has been charging for international calls and roaming. MIM applications do not have

those internationalboundaries. You want to communicate with your friends no matter wherethey

geographically are.

6. World is getting more visual 

Although SMS-messages have been relatively cheap, telcos are still taking quite big premium

with multimedia messages. With MIM applications you can send whatever data possible and the

because of the point 2 the alternatives are actually increasing all the time. Basic SMS- type of Page | 14

messaging is just the beginning for MIM applications and there will be probably lots of

innovations in what kind of communication there will be.

Technical

WhatsApp uses a customized version of the open standard Extensible Messaging and Presence Protocol (XMPP). Upon installation, it creates a user account using one's phone number as the username (Jabber ID: [phone number]@s.whatsapp.net). WhatsApp software automatically compares all the phone numbers from the device's address book with its central database of WhatsApp users to automatically add contacts to the user's WhatsApp contact list. Previously the Android and S40 versions used an MD5-hashed, reversed-version of the phone's IMEIas password, while the iOS version used the phone's Wi-Fi MAC address instead of IMEI. A 2012 update now generates a random password on the server side.

WhatsApp is supported on most Android, BlackBerry, iPhone, Nokia, and Windows smartphones. All Android phones running the Android 2.1 and above, all BlackBerry devices running OS 4.7 and later, including BlackBerry 10, and all iPhones running iOS 4.3 and later. However, some Dual SIM devices may not be compatible with WhatsApp, though there are some workarounds for this.

Multimedia messages are sent by uploading the image, audio or video to be sent to an HTTP server and then sending a link to the content along with its Base64 encoded thumbnail (if applicable)

Securit y

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In May 2011, a security hole was reported which left WhatsApp user accounts open for session hijacking and packet analysis. WhatsApp communications were not encrypted, and data was sent and received in plaintext, meaning messages could easily be read if packet traces were available.In September 2011, WhatsApp released a new version of the Messenger application for iPhones, closing critical security holes that allowed forged messages to be sent and messages from any WhatsApp user to be read.

On January 6, 2012, an unknown hacker published a website (WhatsAppStatus.net) that made it possible to change the status of an arbitrary WhatsApp user, as long as the phone number was known. To make it work, it only required a restart of the app. According to the hacker, it is only one of the many security problems in WhatsApp. On January 9, WhatsApp reported that it had resolved the problem, although the only measure actually taken was to block the website's IP address. As a reaction, a Windows tool was made available for download providing the same functionality. This problem has since been resolved in the form of an IP address check on currently logged-in sessions.

On January 13, 2012, WhatsApp was removed from the iOS App Store, and the reason was not disclosed. The app was added back to the App Store four days later.

In May 2012, security researchers noticed that new updates of WhatsApp no longer sent messages as plaintext,but the cryptographic method implemented was subsequently described as "broken". As of August 15, 2012, the WhatsApp support staff claim messages are encrypted in the "latest version" of the WhatsApp software for iOS and Android (but not BlackBerry, Windows Phone, and Symbian), without specifying the implemented cryptographic method.

German Tech site The H demonstrated how to use WhatsAPI to hijack any WhatsApp account on September 14, 2012.Shortly after, a legal threat to WhatsAPI's developers was alleged, characterized by The H as "an apparent reaction" to security reports, and WhatsAPI's source code was taken down for some days. The WhatsAPI team has since returned to active development.

privacy

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A major privacy and security problem has been the subject of a joint Canadian-Dutch government investigation. The primary concern was that WhatsApp required users to upload their mobile phone's entire address book to WhatsApp servers so that WhatsApp could discover who, among the users' contacts, is available via WhatsApp. While this is a fast and convenient way to quickly find and connect the user with contacts who are also using WhatsApp, it means that their address book was then mirrored on the WhatsApp servers, including contact information for contacts who are not using WhatsApp. This information was stored in hashed, though not salted form and without "additional" identifying information such as a name, although the stored identifying information is sufficient to identify every contact.

On March 31, 2013, the telecommunications authority in Saudi Arabia, the Communications and Information Technology Commission (CITC), issued a statement regarding possible measures against WhatsApp, among other applications, unless the service providers took serious steps to comply with monitoring and privacy regulations.

One of the drawback of WhatsApp is that the user does not need to send a friend request to send messages to another user. However, users can block numbers on WhatsApp.

Acquisition :

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On February 19, 2014, Facebook announced it would be acquiring WhatsApp for US$19 billion. It will pay $4 billion in cash, $12 billion in Facebook shares and an additional $3 billion in restricted stock units to be granted to WhatsApp’s founders, Jan Koum, Brian Acton, and employees that will vest over four years subsequent to closing. The transaction is the largest purchase of a company backed by venture capitalists ever.

Why Use Whatsapp

No Hidden Cost:Once download the application, can use it to chat as much as one want. Send

a million messages a day for free! WhatsApp uses Internet connection: 3G/EDGE or Wi-Fi

when available.

Multimedia:Send Video, Images, and Voice notes to friends and contacts.

Group Chat:Enjoy group conversations with one’s contacts.

No International Charges: just like there is no added cost to send an international email, there is any cost to send WhatsApp messages internationally. Chat with friends all over the world as WhatsApp Messenger is a smartphone messenger available for Android and other smartphones. WhatsApp uses your 3G or WiFi (when available) to message with friends and family. Switch from SMS to WhatsApp to send and receive messages, pictures, audio notes, and video messages. First year FREE! ($0.99 USD/year after)

long as they have WhatsApp Messenger installed and avoid those pesky international SMS

costs.

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Say no to PINs and Usernames: Why even bother having to remember yet another PIN or

username? WhatsApp works with phone number, just like SMS would, and integrates

flawlessly with existing phone address book.

No need to Login/LogOut: No more confusion about getting logged off from another

computer or device. With push notifications WhatsApp is ALWAYS ON and ALWAYS

CONNECTED.

No need to add buddies: Your contacts who already have WhatsApp Messenger will be

automatically displayed.

Offline Messages: Even if someone miss push notifications or turn off phone, WhatsApp will

save messages offline until retrieve them during the next application use.

And Much More: Share location, Exchange contacts, Custom wallpaper, Custom notification

sounds, Landscape mode, Precise message time stamps, Email chat history, Broadcast

messages and MMS to many contacts at once and much much more

Whatsapp SWOT Analysis

Strengths:

Loyal customers

Market share leadership

No need to log

Group Chat

Allow send videos, pictures, voice notes

You can put profile picture

No need to add friends

No need PIN or user number

Available for all platforms

Weaknesses:

Not diversified

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Weak distribution network

To access the account can only be paid by credit card only

Only works with a data plan or wi - fi

Opportunities:

Online

Advanced technology

Recognized application

Modernization of people

Increased demand for smart phones

Threats:

Competition

Product substitution

Similar applications and free

Whatsapp- Forces Analysis

Bargaining Power of Suppliers

High competition among suppliers – High levels of competition among suppliers acts to reduce

prices to producers. This is a positive for Whatsapp. "High competition among suppliers (Whatsapp)"

has a significant impact, so an analyst should put more weight into it. This statement will have a short-

term positive impact on this entity, which adds to its value. "High competition among suppliers

(Whatsapp)" is an easily defendable qualitative factor, so competing institutions will have a difficult

time overcoming it. "High competition among suppliers (Whatsapp)" will have a long-term negative

impact on this entity, which subtracts from the entity's value.

Bargaining Power of Customers

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Large number of customers - When there are large numbers of customers, no one customer tends to

have bargaining leverage. Limited bargaining leverage helps Whatsapp.

Product is important to customer - When customers cherish particular products they end up paying

more for that one product. This positively affects Whatsapp. This statement will have a short-term

negative impact on this entity, which subtracts from its value.

Intensity of Existing Rivalry

Fast industry growth rate – When industries are growing revenue quickly, they are less likely to

compete, because the total industry size is also growing. The only way to grow in slow growth

industries is to steal market-share from competitors. Fast industry growth positively affects.

Relatively few competitors- Few competitors mean fewer firms are competing for the same

customers and resources, which is a positive for Whatsapp. "Relatively few competitors (Whatsapp)"

has a significant impact, so an analyst should put more weight into it. "Relatively few competitors

(Whatsapp)" will have a long-term positive impact on the this entity, which adds to its value.

Threat of Substitutes

Substitute has lower performance - A lower performance product means a customer is less likely to

switch from Whatsapp to another product or service.

Substitute is lower quality – A lower quality product means a customer is less likely to switch from

Whatsapp to another product or service.

Threat of New Competitors

Strong distribution network required – Weak distribution networks mean goods are more expensive

to move around and some goods don’t get to the end customer. The expense of building a strong

distribution network positively affects Whatsapp.

Strong brand names are important - If strong brands are critical to compete, then new competitors

will have to improve their brand value in order to effectively compete. Strong brands positively affect

Whatsapp.

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Patents limit new competition-- Patents that cover vital technologies make it difficult for new

competitors, because the best methods are patented. Patents positively affect Whatsapp. "Patents limit

new competition (Whatsapp)" has a significant impact, so an analyst should put more weight into it.

Advanced technologies are required - Advanced technologies make it difficult for new competitors

to enter the market because they have to develop those technologies before effectively competing. The

requirement for advanced technologies positively affects Whatsapp.

Pestle Analysis

Political 

The popular free unlimited service Whatsapp might be blocked in Saudi Arabia 'within weeks', local newspaper Aleqtisadiah   reported.

Country's Communications and Information Technology Commission (CITC) claimed that the service doesn’t comply with local rules and regulations.

Economic

Favorable economic environment.

Social  

Age – Nowadays, whatsapp is used by in between 20 to 40 years of age. Earlier people used text

messages, that is, SMS, but nowadays they have started using it for communications with their friends

and family. People can also send voice messages, images, as well as video through whatsapp. As we

know, whatsapp is available in free of cost for 1 year. And for accessing data, one needs data plant to

send and receive messages.

Technological  

Compatibility - The compatibility for WhatsApp starts from Nokia S40 phones, the least one apps-

compatibility wise. After this its compatibility increases to Nokia S40 Symbian, S60, and

Android/iOS/BB OS/Windows, etc.

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Interface – Whatsapp interface is quite easy and simple to handle. Whatsapp launches updates

frequently to make its interface more appealing and user friendly but mainly its interface depends on

type of platform who are using.

Bandwidth – With just texting option, whatsapp does not take much bandwidth. Only downloading

may force it to use high network charges, but if you are texting only, then whatsapp takes very less

bandwidth.

Security – One need to have working registered phone numbers to use whatsapp. The apps scans

contact list and searches for people who already use it. One can chat with them, but blocking options is

also there for security. If one don’t want to chat or contact that annoying person in one’s contact list,

one can block them. Blocking someone means that one don’t receive messages from the person one

blocked.

Legal

Whatsapp legal factors consists of :

Acceptance – It is an agreement between Whatsapp Inc., the owner and operator of

www.whatsapp.com , the whatsapp software including whatsapp messenger and user of software.

Using the service, user agrees to the terms of service and privacy policy.

Whatsapp Service – The terms of service applies to the all users of whatsapp. Information provided

by users to whatsapp, may provide links to third party websites.

Access – Whatsapp permits user service only for personal use and doesn’t not grand persmission to

resend or change use of access for service. The user will not be able to duplicates or copy any part of

service.

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Grand Strategy

• Grand strategies, often called master or business strategies, provide basic direction for strategic

actions. It Indicate the time period over which long-range objectives are to be achieved.

• Many firms involved with multiple industries, businesses, product lines, or customer groups

usually combine several grand strategies.

• Any one of these strategies could serve as the basis for achieving the major long-term

objectives of a single firm.

The four alternatives of grand strategy are as follows:

Stability – Stability means to remain the same size or to grow slowly and in a controlled

fashion. In case of Whatsapp stability,Whatsapp is available on every operating systems of

smartphones.

WhatsApp Reaches 300 Million Active Users

This chart illustrates the incredible growth of smart phone messaging service Whatsapp.

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Future

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What lies ahead is known by none. The application is free today but may not be tomorrow or so the talks go around.

As far as the facilities provided are concerned, WhatsApp today does not provide the option of ‘Calling’ (although its logo has a phone receiver inscribed in the centre!). It may have this in future. With the technology growing in leaps and bounds, we may also expect a Skype-like free video call via WhatsApp. What has been a user-friendly, connectivity application till date may take a turn towards shared-information holding platform like Drop box, meaning people may not only be able to chat on WhatsApp but also share and store common data.

With the advent of ‘Cloud Computing’, the world has virtually shrunk down to the size of a room. It may not come as a surprise hence, to see such a large network-sharing support on WhatsApp someday.

Whether the mole will actually become a mountain someday is a mystery. Till then, we enjoy the present and await the surprises of future.

Marketing strategies adopted by WHATSAPP

At its core, marketing is about connecting companies with people. If your company sells a product or service to a particular audience, then everything you do to make them aware of it, buy it and use it - both internally and externally - is considered marketing. This includes what you do, how you do it, and most importantly, why you do it.Most people can understand the executional elements of marketing such as ads, press articles or email campaigns. But it’s much harder for them to understand the underlying thinking behind marketing-  the strategies, processes and frameworks that help companies view their business in the context of their brand, their audience and their competition. In fact, it’s impossible not to engage in this sort of thinking, though most people do it in a very shallow and simplistic way.Another important aspect of marketing is that it always comes at some cost. While there are plenty of product hooks and growth tactics like email blasts, social media posts, in-person conversations, etc. that require little to no monetary outlay, the truth is that they still take time to execute. For companies that are typically only a few months away from running out of money, time is an extremely valuable commodity. If you were to quantify the time they spend on marketing thinking, the cost of this function would be a significant portion of the overall business.

Following the same sentiment, marketing rarely happens by itself. Even in the situation where the product does go viral, it still needs continuous love and optimization to adjust to market conditions and audience sentiment. Nothing is ever guaranteed.

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WhatsApp and the fallacy of zero marketing

In the start-up world, there’s a commonly held notion that companies with zero marketing can succeed. In fact, many people believe that zero marketing is the fastest path to a big exit, as it allows the company to devote the majority of resources to engineering and other technology-related functions. Why would anyone spend money on marketing if a “great product” will “go viral” and “attract users on its own”?

The problem stems from the long-held misconceptions and stereotypes of marketing in the start-up community. Entrepreneurs, investors and even tech journalists think of marketing a necessary evil that comes in the form of paid ads, spammy growth tactics and annoying PR people, rather than thinking about it as a strategic asset that creates the ideal environment for growth.

WhatsApp did not do zero marketing, because the concept is a myth There may be no greater testament to the viral nature of WhatsApp than the fact that the company has accomplished all this without investing a penny in marketing. Unlike their smaller competitors, it hasn’t spent anything on user acquisition. The company doesn’t even employ a marketer or PR person. Yet like the world’s greatest brands, it’s created a strong emotional connection with consumers. All of WhatsApp’s growth has come from happy customers encouraging their friends to try the s

THE ROLE MARKETING PLAYED IN WHATSAPP’S SUCCESSSo, what kind of marketing did WhatsApp do if the company spent no money on the discipline, hired no marketer and employed no PR person? They actually did a fair amount, though they also left many opportunities on the table. Below are a few examples.

WhatsApp built a marketing foundation by articulating its beliefs

Beliefs & values: WhatsApp’s founder, Jan Koum, had a very specific view of the world having grown up in a former Soviet country. His beliefs around privacy, specifically in communications, were deeply ingrained in his pysche from a very young age, and those beliefs translated directly into what the product is today (messaging app for small, private networks), how it works (it only requires your phone number to sign up + messages are destroyed from WhatsApp’s servers upon arrival) and why it was made (to facilitate connections between people). Similarly, Jan made a poster that said “No Ads, No Games, No Gimmicks” which espoused the values of simplicity and efficiency. These values and beliefs have permeated the organization and become an important part of the WhatsApp brand, defining the product for years to come.

Naming: Jan named the company WhatsApp, a play on words of “What’s up?” It was a conscious choice draws connotations of a human conversation and a product that is fun and casual. While it’s arguable that the name is good, but at least there was some thought behind it.

Audience: It’s known that much of WhatsApp’s traction was outside of the US. The team must have realized that one of the most receptive audiences were people with families and friends

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living outside their home country, which made the cost of SMS prohibitively high. Jan’s own experience coming from a foreign country help to solidify this notion. The team must have spent a lot of time thinking about identifying their ideal customer (a core marketing function) and testing their hypotheses in market. 

Go to market strategy: WhatsApp had to seed its product in some way to get it off the ground. I would guess that this was done through a combination of in-person conversations, social events, emails, social media promotion, forums (including Jan’s favorite, FlyerTalk) and a variety of other low-fi tactics. Every small interaction was important because it gave the business a higher chance of success, even if it was only by adding one additional user.

Pricing: In the early stages of the business, WhatsApp decided to charge $0.99 for the app to signal a premium position in the market and to differentiate itself from the myriad of free competitors. Later, the company changed its model to free for a year + $0.99/year after, when growth became a priority. This was most likely done through a mix of observation, intuition and testing. 

Product design: The team designed and built a product that met a specific set of customer needs, namely communicating with a close network in a private way, at essentially no cost. To ensure the product had a good market fit, the team had to decide which features to build, which not to build (a recurring discussion among the team. as the graphic above suggests) and how to prioritize customers’ needs, presumably with their input. They also chose a design aesthetic that underscores simplicity over everything else. These decisions were not arbitrary, but rather grounded in set of human insights and assumptions.

Analytics & optimization: Someone on the team must have spent time analyzing the app’s usage numbers to see what worked best and what didn’t, and conveyed those findings to the product team to make the experience better.

In many of these examples, it’s likely that CEO Jan was leading WhatsApp’s marketing efforts, and rightfully so. The CEO sets the vision of the company, recruits and motivates employees, promotes the company to customers and investors and directs the broader vision of the product. If there’s one C-suite role that can assume the marketing function, it’s the company’s leader.

But even with other team members contributing, it’s clear that a lot of marketing was done at Whatsapp, at a significant cost to the team’s time. It’s impossible for the company to get to where it is today without this investment.

3.THE MARKETING WHATSAPP DID NOT DO

Despite the marketing activities that WhatSapp engaged in, there are many others that it overlooked. Below are the most important ones. While some of them are already causing the company problems, others will become problematic in the near future.

WhatsApp did not develop a strong brand. While WhatsApp has some of the basic elements of a brand (namely, its beliefs about privacy and simplicity), it never really engaged in formal brand-building activities. For example, the founders stayed out of the media spotlight, they

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didn’t voice their beliefs in a public forum, they didn’t actively connect with their audience and they didn’t set up a social media presence. As a result, they missed an opportunity to cement their proposition in the minds of customers, beyond building general awareness. 

WhatsApp did not create a deep emotional connection with consumers. It’s disingenuous to lump WhatsApp with some of the world’s greatest brands (many of which it took decades to achieve this status), claiming that the company created a deep emotional connection with its consumers. Emotions are a powerful tool in the marketing arsenal, but simple preference (I prefer WhatsApp over company X) in no way equal’s passion. Who can really say they’re a diehard WhatsApp fan, ready to follow the company blindly as some do for app like Path and Foursquare (despite their limited success), and more importantly, brands like Coke, Nike, Apple, BMW and Pinkberry? I would guess that the number is very low. WhatsApp limited its connection with people by positioning itself solely around utility and efficiency, while leaving little room for personality, self-expression and other emotional triggers.

WhatsApp did not react quickly to people’s needs. A prime example of the company not being in touch with its customers is the very late release of its iOS7 app (more than a month after the OS went live), which drew widespread criticism and frustration. Once the new update was finally released, it didn’t live up to expectations. Behaving this way is very dangerous, especially in a mobile ecosystem known for fickle behaviors and low switching costs.

WhatsApp did not protect its key differentiators. If WhatsApp pioneered privacy and simplicity in mobile messaging, then the company is letting competitors beat it at its own game. Apps like Telegram and Threema are using features like encrypted messaging and uber-simple interfaces to stand out in the market, and their message is resonating with customers. On the backdrop of WhatsApp’s server outage, for example, Telegram has claimed a mind-boggling 5MM new users per day, an indication of people’s indifference to WhatsApp.

WhatsApp did not prepare for failures. WhatsApp was lucky to survive the last few years without any big server outages or privacy breaches. But what would the company have done if something bad happened? A mere two years ago, Airbnb found out the hard way and quickly introduced an insurance and protection plan for hosts. Now, just days after its acquisition, WhatsApp is facing heavy criticism after a 4-hour service outage - something that a status account on Twitter alone won’t help to mitigate.

Many of the marketing initiatives discussed above do not necessarily require a lot of time. They do require awareness, thought and buy-in from the founders. If the culture of the company is to disregard marketing until things stop being rosy, then it will have already too late to turn back. There are simply too many messaging apps on the market for people to stick with a company that doesn’t invest in them.  

4. THE THREATS WHATSAPP FACES BY CONTINUING TO IGNORE MARKETING

Over the next few months, WhatsApp faces many marketing challenges that product features alone will not solve. To navigate its way around the fast-moving market, the company will have to modify

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its business approach from one that is indiscriminately focused on user growth to one that is rooted in a deep understanding of its audience, market niche and brand.One of the company’s imminent challenges is protecting itself from the negative perceptions of Facebook. Facebook is commonly regarded as an antithesis to privacy through business practices like invasive user profiling and the sale of personal data to advertisers. These perceptions run counter to Whatsapp’s culture, so how can they be reconciled? And how much can Jan really influence Facebook by joining the company’s Board? The WhatsApp brand is thin already, so the company needs to take a bold stance to reinforce its beliefs and promise to customers.

Another challenge is rising above the noise of competition from companies like Telegram, Threema, Line, KakaoTalk and WeChat. These are no longer the amateur messaging apps that WhatsApp competed with in Botswana, but world-class, refined apps with deep pockets and large consumer followings. Are utility and functionality enough to differentiate WhatsApp the more these companies claim to have better or equal product features? What is the company’s unique benefit - functional and emotional - and how will that change over time?Lastly, WhatsApp will need to address its customer happiness. What reasons will the company give its customers when they’re exposed to competing messaging apps? Will it develop new ways to enhance the experience, or will it simply try to develop competitive measures to slow down switching? One thing is certain - hiding away in the comfort of WhatsApps Mountain View offices is not an option.

Looking at WhatsApp’s path to success demonstrates that the company did plenty of marketing, even if it lacked a dedicated person for the function and spent no money on the service. The company articulated its values and beliefs, defined its audience, go-to-market strategy and pricing, built a product to meet those needs and optimized it based on customer feedback. While the team did not spend a lot of money on the marketing function, it certainly invested time in the process.Nonetheless, the company’s investment in marketing was not enough, and today the company faces more competition than ever before - much of it exploiting the weak perceptions its developed in the minds of customers. If WhatsApp is to continue on a path of success, it should stop celebrating its marketing deficiency and instead focus the organization on serving its customers’ needs in a more focused way. The company needs to place a stake in the ground with much more conviction than it has in the past, and build features, services and marketing programs that support a unified message.

WhatsApp succeeded despite its lack of marketing, not because of it. Let’s hope the company distances itself from the notion of zero marketing sooner rather than later, otherwise it will follow the steps of other fallen startups who thought they could succeed in a human business with technology alone

Pricing strategy adopted by WHATSAPP

The network that gets the most users early on becomes the most valuable, locking in users and locking out competitors. Big networks carry heavy switching costs.

As a result, products in winner-takes-all markets can also afford to (and should) spend more for early users than for later ones because these users help to secure their network’s dominance and establish lock-in. It’s definitely worth overpaying for them, even if it means giving the software away for free.

The Year Long Trial and the Penny Gap

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Most networks use an ad-supported model to keep the service free while driving revenue to keep growth going. WhatsApp certainly understood the critical nature of network growth and the winner-takes-all implications of building a business on top of a massive user base, but they also knew they didn’t want an ad-supported product.

WhatsApp's “free for the first year” model allowed them to solve for both business requirements — it got users over the dreaded Penny Gap and onto the platform, contributing to its rapid growth and creating lock-in. The eventual revenue meant that WhatsApp didn't have to worry about monetization through advertising — something the founders are still against. In addition to solving this challenge, the year trial gives users enough time to try and get hooked on the product, but still sets the precedent from the beginning that WhatsApp will not be free forever.

Paying for Early Users

When network effect is at play, it's well worth it for startups to overpay for early users in order to establish dominance. Those early users create value by bringing in and creating new connections.

You can overpay for these users in two ways: By overspending on pay-per-install above your anticipated lifetime value, or by absorbing the cost of giving away the product for free. In WhatsApp’s case, they chose the latter.

While they look like equivalent choices (after all, its paying one way or another), the reality is that paid installs can often be inferior to and more expensive than giving your product away. For WhatsApp, paid acquisition would’ve been slower, the network effect would’ve struggled to take hold, and the user experience would’ve been much more cumbersome, resulting in less word-of-mouth marketing and stifling adoption.

Morgan Brown is Head of Growth at both Qualaroo and TrueVault. Previously, he co-founded Full Stack Marketing. He's directed marketing at several startups and is the author of books on the subject of digital marketing and growth.

Had WhatsApp not pivoted to free upfront, we probably wouldn't be talking about it today.

Letting the Trial Ride in Growing Countries

WhatsApp gets the Penny Gap. In some fast-growing countries where they’re trying to establish dominance they’re letting the $0.99 year one charge slide, continuing to pay upfront for early users in markets where the company is trying to establish itself as the clear winner.

But WhatsApp is not the only company paying a premium for new users in emerging markets. In places like India, Malaysia, and Brazil, the potential audience is huge, yet customers often can't afford costly data plans that come with regular mobile internet use. In a bid to establish network lock-in in these new markets, social networks are arranging deals with mobile carriers, paying all or some of customer data costs. They’re trying to prevent payment friction from slowing down network adoption.

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This process is no doubt expensive for the companies in question, with the cost of subsidizing data likely exceeding resulting early revenue. Yet these types of strategies are becoming necessary as more apps fight for growth and try to stave off in-country competitors. They all know the value of Metcalfe’s Law.

The Takeaway

While WhatsApp’s success is no doubt due in large part to the fact that they solved a major problem for a large number of users — exorbitant SMS charges and restrictions of local carriers — their savvy pricing decision is equally noteworthy. It not only helped them overcome the Penny Gap, but also allowed them to avoid advertising on the platform while creating the network value needed to lock in users.

It's this strategy that crowned WhatsApp as the early victor, capturing enough of the mobile messaging market to be worth $19 billion to Facebook. For any company also looking to expand in emerging markets, the value of this move is clear.

The challenge now is that the mobile market has grown so big that there is no longer one true winner. Apps like Line are growing even faster and winning in countries where WhatsApp has been unable to make a dent. As this trend continues, it will be interesting to see if WhatsApp rises to the occasion or loses its user lock-in, becoming the mobile messaging version of Friendster in the process.

Conclusion

WhatsApp has been around for quite some time now and is being used by most and offers functionality like text based messaging and files transfers. But given enough time Line is a capable product and in the future it hold the potential to overtake WhatsApp, unless some new innovations is adopted by the world leader in messengers.

Looking at WhatsApp’s path to success demonstrates that the company did plenty of marketing, even if it lacked a dedicated person for the function and spent no money on the service. The company articulated its values and beliefs, defined its audience, go-to-market strategy and pricing, built a product to meet those needs and optimized it based on customer feedback. While the team did not spend a lot of money on the marketing function, it certainly invested time in the process.

Nonetheless, the company’s investment in marketing was not enough, and today the company faces more competition than ever before - much of it exploiting the weak perceptions its developed in the minds of customers. If WhatsApp is to continue on a path of success, it should stop celebrating its marketing deficiency

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and instead focus the organization on serving its customers’ needs in a more focused way. The company needs to place a stake in the ground with much more conviction than it has in the past, and build features, services and marketing programs that support a unified message.

WhatsApp succeeded despite its lack of marketing, not because of it. Let’s hope the company distances itself from the notion of zero marketing sooner rather than later, otherwise it will follow the steps of other fallen startups who thought they could succeed in a human business with technology alone

BIBLIOGRAPHY

http://www.whatsapp.com/

http://en.wikipedia.org/wiki/WhatsApp

http://www.wikiswot.com/SWOT/4_/Whatsapp.html

http://nivedithg.blogspot.in/2012/10/wechat-mobile-app-review.html

http://www.wikiwealth.com/five-forces:whatsapp

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