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s1 {font: 7.0px Helvetica}Strategic and tactical tools for E-BusinessMandatory assignmentFOURSQUARECase ReportGroup no.: 16Authors: Isabella Lu?tken (031192-34041)Ingrid Haug (150192-4330),Melisa Popanicic (201294- 3876)Vanesa Kerkelic (230192-4006)Study program: M.Sc. Business Administration and E-BusinessSemester: 1Lecturers: Qiqi Jiang & Rony MedagliaDeadline: 1st of December 2017Number of pages: 10Character count: 16.8411INTRODUCTIONFoursquare is a local search-and-discovery online service that can be accessed via amobile application.

The app provides its users with helpful recommendations and tips ofplaces near a current location. The app was launched in 2009 by Dennis Crowley andNaveen Selvadurai. (Piskorski, Eisenmann, Bussgang & Chen, 2013)The following report gives insights into the business practices of Foursquare,analyses the reasons for its growth and presents suggestion on which actions the companyshould undertake to maintain a successful social media platform by answering four questionsgiven by the lecturers. The findings are linked to the case study foursquare, issued by theHarvard Business School in 2013. In addition, secondary online sources have been used tocomplement the research.

QUESTION 1How is Foursquare helping people interact with each other? How is Foursquarehelping businesses interact with its customers?Foursquare is helping people interact with each other in several different ways. TheFoursquare app is used to find places such as restaurants, museums, bars, parks, andshopping centres. Users can check-in to a location, write a review (“Tip”), share photos andgive the particular location stars based on their satisfaction of the visit.

In addition, the app isused to find out where the users’ friends are and to meet up at the same location. Anotherelement that encouraged the communication and competition to interact with each other isthe game mechanisms. The game features encourage users to compete for the highestscore. An online leaderboard shows, which users have earned the most points and it is resetevery week, so that the users have a new chance to reach the top and beat their friends. Bychecking in to a specific location or a set of different locations, users can earn “Badges”. If auser checked in to ten different locations, he or she could get the “Adventurer” badge. Theuser with the most check-ins could gain the title “Mayor”. Finally, the app has a friendinvitation functionality.

Users can find their friends on Facebook and Twitter, or import their2address book. (Piskorski, Eisenmann, Bussgang & Chen, 2013) All of the functionalitiesmentioned above, encourages the interaction between users, as it enables users to exploreactivities together with their friends in a newly manner.In the section above we have pointed out how Foursquare is helping its users tointeract with each other.

The report will now highlight the company’s approaches to helpbusinesses interact with their customers. Firstly, Foursquare allowed the businesses to uselocation-based advertisement for free. By doing so, the businesses could reach potentialcustomers that were close by.Furthermore, the businesses could offer loyalty programs (“Specials”) that rewardedcustomers for specific behaviours. A “Special” could be a free coffee at a coffee shop, wherea user checked-in several times a month. Additionally, the users can share their locationsand check-ins on Facebook and Twitter, which allows the businesses to respond to theircustomers through other social platforms. Foursquare also made online tools available thatallowed venue managers to “claim” and edit their venue’s description.

(Piskorski, Eisenmann,Bussgang & Chen, 2013)These profiles allowed them to constantly update and change their offers. From thecustomer’s point of view, Foursquare allowed users to search for what they were looking forand get a list with recommended restaurants in the area. Additionally, Foursquareencouraged personal user comments. This made others experiences of the restaurant moreplayful and fun, which is an attractive advertising element. (Piskorski, Eisenmann, Bussgang& Chen, 2013)QUESTION 2What explains Foursquare’s growth to date?It is important to mention that the answers to this question refer to the case publishedin March 2013. Since March 2013 the company has changed tremendously. Therefore, thefactors that explain Foursquare’s growth to date will be related to the time period 2009-2011,which is the time period the case mainly addresses. When a company succeeds, it is easy tolook back at what happened and link all actions to its success, but it is hard to know how3much of the company’s growth could be accredited to good timing, and how much to certainstrategic actions.

First of all, they had a well thought out launch strategy. They tested the product byreleasing an alpha version, which was only “half-baked” in terms of functionality. With thisstrategy, the co-founders got an indication of what the users wanted the application to be.This allowed Foursquare to correct and tailor the product towards the users’ preferences.Additionally, the founders waited to launch their product until the annual South bySouthwest (SXSW) Interactive festival in Austin, Texas in 2009. During the festival, theymanaged to get thousands of users. The word about the app spread fast, and created asynergy effect within young crowds. The number of users, and the speed of growth attractedboth venture capital investors and angel investors.

(Piskorski, Eisenmann, Bussgang &Chen, 2013)In January 2010, the company launched “Foursquare Everywhere” in response touser feedback. This allowed users to sign up for the service from any city in the world, whichopened up for the opportunity to expand and grow further in new destinations. (Piskorski,Eisenmann, Bussgang & Chen, 2013)Another reason why Foursquare grew so fast was the wave of the new smartphonesin 2009. The smartphone marked exploded in size, and it changed the way people wereinteracting. The success of the iPhone stimulated the competitors to develop newsmartphones which were built on Google’s operating system, Android. In addition to theiPhone app, the company released an Android and BlackBerry app. Crowley, one of thefounders, stated that “We quickly expanded to cover as many smart phones as possible…You want all of your friends to participate, not just the six that have the right phone”.

(Piskorski, Eisenmann, Bussgang & Chen, p. 4, 2013)In addition to this, Foursquare had several commercial relationships with big mediacompanies like Bravo TV and MTV. Foursquare offered for example badges to users thatchecked in at the exact locations that were described in Bravo’s TV-show.

While thecommercial deals helped small establishments to build brand credibility and awareness,Foursquare was raising popularity and generating revenue. (Piskorski, Eisenmann,Bussgang & Chen, 2013)4Finally, the founders were engaging with the users face-to-face and on differentplatforms like their own blog, Twitter and Facebook, where both Crowley and Salvaduraifrequently responded to criticism and feedback. By listening closely to their customers,Foursquare could gain important insight and adjust the app after what the customers wanted.This approach undeniably affected Foursquare’s growth positively. (Piskorski, Eisenmann,Bussgang & Chen, 2013)QUESTION 3Why did foursquare invest so much in developing search functionalities, butyet has done so little to ensure that the platform has a wide breadth of users,or to encourage its users to check in?With the smartphone industry on the rise, Foursquare invested most of theirresources into the development of search functionalities. They did so partly because theycounted on the fact that the word about a great product will spread by itself. The spreading ofFoursquare by word-of-mouth was what they were hoping to gain from the commercialpartnerships they agreed to with MTV and Bravo. This seemed to have attracted a lot ofpeople, generating a high organic growth.

Thereby, Foursquare did not urge the need toinvest more into getting a wide breadth of users but rather into the technology behind it. Thiswas reflected in their organizational structure as well, since they had 45 employees by 2010and more than 50% were engineers. (Piskorski, Eisenmann, Bussgang & Chen, 2013)The Foursquare team was convinced that the incentives they provided their userswith, such as the “Badges” and “Specials”, was reason enough for them to stay or mighteven motivate them to share it with their family and friends. The prioritization lied withproduct development, as this should be the foundation for user acquisition. They seemed tobe of the opinion that creating functions like the “Share with your Facebook friends” would bemore valuable in the long term than investing in developing marketing strategies. This issupported by the fact that they were trying to cover as many mobile operating systems aspossible. Again, they wanted to give their users the chance to spread the word themselvesby giving them the necessary technical functions to do so. Therefore, they prioritizedcompatibility and expanded next to Apple’s iOS also to Android and Blackberry OS and5hence covered the majority of mobile devices.

(Piskorski, Eisenmann, Bussgang & Chen,2013)According to Exhibit 7, US mobile phone users engaged most in the search servicefor products and services. Foursquare was following the market trend at that time byenhancing the search functionalities and fulfil the market need first, prior to expanding theiruser base. This is just another indicator of why Foursquare was investing their resources intodeveloping the search functionalities further. (Piskorski, Eisenmann, Bussgang & Chen,2013)What is more, Foursquare invests heavily in technology up until today, as can beseen in Appendix 1. Therefore, one could argue that the founders foresaw the potential in theamounts of data Foursquare was collecting and planning to steer the company into thedirection of a business intelligence firm.

(Contributor 2017)QUESTION 4What should Foursquare do next to compete against other Social Mediaplatforms? What can we learn from the Foursquare case in terms of building asuccessful Social Media platform?In order to make specific suggestions for Foursquare’s next move, it is important tomention that the Foursquare app has already gone through a major transformation. Byseparating the app into Foursquare City Guide and Swarm, the company intends to competeagainst different competitors more effectively. Foursquare City Guide focuses on thediscovery of different places and gives intelligent and personalized recommendations,entering the battle against location-based services such as Yelp. Swarm on the other handtakes over the networking and gaming features, allows users to check-in to a given locationand meet with friends.

Thus, Swarm is positioning itself in the same segment as Facebook.(The Verge, 2014) In the competitive environment, Foursquare needs to strengthen itsmarket position and differentiate both its services from those if its competitors. Therefore, thecompany should continue to provide a superior user experience by offering valuablerecommendation and exploring even more gamification elements. (Barnett 2010)6Surviving on the marketplace of established social media platforms, Foursquare couldconsider agreeing on a collaboration with Yelp. The platform allows users to search for abusiness’s Yelp page, where they can rate the business and write reviews.

Although Yelphelps people to figure out which places to visit, the company only knows about the users whowrite reviews. Foursquare represents the missing link and could enrich Yelp with its locationintelligence. By collecting user data through the game mechanisms, Foursquare knowswhere users are at any given moment. Besides the recording of location data, Foursquare iscreating a social network effect, as it encourages others to join their friends at a particularlocation.

However, Yelp can also provide Foursquare with valuable resources such ascontent and distribution. Moreover, Foursquare would benefit from Yelp’s popularity.(O’Donnell, n. d.)As Foursquare gives its users the opportunity to share their check-in on Facebookand Twitter, it is suggested to harvest a reverse connection.

The company might be able tonegotiate a deal with the two social media giants to offer their users the opportunity to sharetheir Facebook or Twitter check-ins to their Foursquare profile. Foursquare would profit frompossible new users by upping its brand awareness and even more from the higher number ofposts on Foursquare. Furthermore, it is recommended that Foursquare analyses the usersthat use the check-in function of their competitors. Specifically, Foursquare should focus onexamining those individuals’ traits and preferences, and even divide the different kinds ofusers into clusters based on their attitudes. As a consequence, Foursquare might be able tofind some correlations between the users and why they prefer to check in via Facebook orTwitter and not Foursquare. This information can in turn be used in their marketing andcommunications to target the competitors’ users and direct them to Foursquare.Considering the strong market position of Facebook, Twitter and Yelp on theEuropean and US market, Foursquare should intensify the efforts in establishing its locationbasedservices on the Asian market.

By investing more in the B2B market place, thecompany could gain considerable market share in Asia that competitors have not explored tothe same extent yet. Already today partners in Asia are using Foursquare’s locationintelligence to build AI, AR, online-to-offline commerce, ride-sharing and messagingsolutions. Hence, it is suggested that Foursquare cultivates its already existent partnershipswith companies such as Samsung, LG, Momo, Carousell and Tencent that rely onFoursquare’s Places database. (Medium, 2017)7After giving suggestions on how Foursquare could compete against other SocialMedia platforms in the future, the report will now focus on highlighting the company’s bestpractices. The wave of new smartphones, the explosion of apps and social networking wereimportant enablers that allowed Foursquare to build a successful social media platform.However, it was the timing of the market launch that contributed to Foursquare’s success inparticular.

The company exposed its app at the Interactive festival, inviting a highlyconcentrated social community to try out the app’s functionality and its integrated gameelements. Being able to attract and retain the early adopters helped Foursquare to grow itsuser base: “If you can get that community using it and hooked on it, then they’ll go back towhere they’re from and start spreading it to their friends.” (Piskorski, Eisenmann, Bussgang& Chen, p.

3, 2013)Instead of spending years on perfecting the app, the co-founders decided to launch aversion that was not fully developed and therefore limited in its functionality and design. Thepurpose of this bold move was to solicit ideas on how to improve the application. Rather thanrelying on market research or usability tests, the founders invested a huge amount of time ininteracting with its users. Such interactions allowed Foursquare to understand its users andhelped to prioritize features in the app development process. (Piskorski, Eisenmann,Bussgang & Chen, 2013)Knowing that Foursquare’s online community enjoyed the entertainment value andthe addictive nature of competing for badges and mayorships, the company first enhancedthe game mechanisms. The game mechanisms did not just set Foursquare apart from itscompetitors, but ensured that their users would stick with the platform and invite even morefriends to join them in different challenges. Other users requested the expansion to differentcities and the coverage of further mobile phone devices. The co-founders’ response tovarious input and the engagement of its users in the creation of new features, was clearlyone of the success factors that enabled Foursquare to propel.

(Piskorski, Eisenmann,Bussgang & Chen, 2013)Another part of Foursquare’s success story is the app’s ability to drive consumers toactually walk to the venues. Being capable of connecting the online and offline world createsa special dimension that other social media platforms did not integrate in their services.While Facebook for example is telling its users what their friends are doing, Foursquare isencouraging its users to invite their friends to a particular location. Apart from Foursquare’susers, the local businesses are forming and broadcasting the service actively.

Businesses8are allowed to promote their products or services, have meaningful conversations andreward customers with discounts or special offers. Due to the fact that Foursquare is lettingusers and business interact with each other, the platform goes beyond a consumer-onlyservice and creates a win-win situation for all parties involved. (Piskorski, Eisenmann,Bussgang & Chen, 2013)9BIBLIOGRAPHYCasePiskorski, M.J., Eisenmann, T.R.

, Bussgang, J. J. & Chen, D. (2013). foursquare. CaseStudy. Harvard Business SchoolWebsitesBarnett, E. (2010).

Five reasons why Foursquare’s mainstream success is inevitable.Telegraph.co.

uk. Available at: http://www.telegraph.co.

uk/technology/socialmedia/7895109/Five-reasons-why-Foursquares-mainstream-success-isinevitable.html Accessed 30 Oct. 2017.Contributor, N. (2017). After Years of Challenges, Foursquare Has Found its Purpose – andProfits.

Entrepreneur. Available at: https://www.entrepreneur.com/article/290543Accessed 2 Nov. 2017Medium.

(2017). Foursquare strengthens in Asia – Foursquare Direct – Medium.Available at: https://medium.

com/foursquare-direct/foursquare-strengthens-inasia-1702d9ce0819 Accessed 3 Nov. 2017.O’Donnell, C.

(n. d.). Why Yelp (.

..and Every Single Retail Establishment) Should SupportFoursquare. Available at: http://www.

thisisgoingtobebig.com/blog/2009/7/13/whyyelp-and-every-single-retail-establishment-should-suppor.html Accessed 30 Oct.2017.The Verge. (2014).

Meet Swarm: Foursquare’s ambitious plan to split its app in two.Available at: https://www.theverge.

com/2014/5/1/5666062/foursquare-swarm-newappAccessed 4 Nov. 2017.10APPENDICESAppendix 1 – Foursquare TimelineSource: Melisa Popanicic, in-class Powerpoint presentation, 03.11.2017


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