The answer is “Yes, I will do”. The biz model of Foursquare would be profitable to sustain long enough. After I read the following webpage, ‘Linking Customer Loyalty with Social Networking’, I am confident with my idea that Foursquare will be a good biz model.
Foursquare does have a biz model to make a profit?
Per following the comment from above link, it says that ‘The business model of the site is crowd-sourcing of geo-location data with information around the location.’ This model allows the company to collect local data which can have potential value to advertisers and marketers to help them analyze customers’ behavior. The revenue model is based on location-based marketing services which is a multi-billion dollar opportunity’. So basically, profits come from company (restaurants, bars and shops, etc) with mainly their advertising, not from users (final customers). (But in the end, users pay to the company in a certain way. One of good things is that Foursquare gives opportunity to small business to benefit from the location of a potential buyer. Foursquare is the first practical location-based network as well as provides user-friendly way. Still Foursquare has million users since last year and has been valued at $125 million (which actually Yahoo offer to bid but rejected). It was told the reason of high valuation is due to the hope of its acquisition by an internet major like Google or Yahoo. This also proves that Foursquare has a huge potential to be a profitable biz model and has a chance to be like Twitter surely, even there is also risk to be ended up as bubble.
Target customer for Foursquare – who?
In my opinion, especially if I just narrow down of the target market of Foursquare into Korea, this would be a quite successful biz model. This can target late 10’s to 30’s female (the most consuming group) who are really keen at finding and sharing information with others and who have really high loyalty to the service. Along with marketing (promotion activities by shops such as providing free drinks, etc.), Foursquare won’t be failed.
Any risks/threatens that Foursquare has?
There is rising risk that Facebook, Twitter and Google would come along the service of Foursquare since they want to have this service and they are able to establish this system soon. And then..? What would be the next step for Foursquare?? Another thing that threatens Foursquare is the lack of the services. Currently, they only provide shop recommendations & users ‘check-ins’ service. It’s more like game but customers will lose interest soon, so definitely Foursquare should seek for alternatives to keep users’ interest on them. Besides, as Pepsi tries to have Foursquare program in June which informs a Pepsi retailer to users and let them accumulate points according to their check-in to store selling Pepsi. This would be a possible biz model that Foursquare can sell to other companies.
Foursquare is a pretty interesting game to me since I can get points and badges and become mayor. It’s also very useful database for me to find a restaurant here in Madrid since I am new comer. Easy to use, fun to use.. next step for Foursquare is finding their concrete position as a successful and continuous biz model.
Cheers,
E
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Very good analysis: nicely framed, and with very clear conclusions. As you saw during the session, I believe the model is sustainable even if Facebbok or Twitter jump in: the game aspect and the community fosters loyalty and precludes users from defeating. But anyway, your analysis is highly professional and well done.
ResponderEliminarVery good job!