Snapchat's Strategic Management Issues and Recommendations

Strategic Management

Table of Contents
Introduction................................................................................................................................3
Issue............................................................................................................................................4
Analysis and Evaluation.............................................................................................................6
Conclusion and Recommendation..............................................................................................8
References................................................................................................................................11

Introduction
Snapchat started in the year 2011 by Evan Spiegel and Bobby Murphy, is an application
developed for picture messaging. It gained popularity because it added a differentiating
feature that would delete the images after its been viewed for a few seconds. It grew
exponentially with 1000 plus user base, (with mostly teenagers) within a very short period of
time and continues till date.The valuation of Snapchat increased when Lightspeed invested in
it in the year 2012. Companies like Facebook were ready to buy Snapchat, as its users
especially the teenagers were leaving Facebook. Its tremendous growth and popularity
amongst the teenagers is giving tough competition to companies like Facebook and Twitter
(Malhotra, 2015).
Successful marketing strategies of Snapchat:
 Vanishing Photos- It allowed image communication with a distinguishing feature,
where the images were automatically deleted after being viewed for a few seconds.
 Stories- It came up with a new feature where one could amalgamate images and
videos and also weave a story. These stories could be viewed for multiple times
within a time frame of 24 hours.
 Snapcash- Partnering with Square, it started Snapcash where users were allowed to
transfer money to the bank account of any contact.
 Discover- It also came up with “Discover” as a product, where display of ads was
within the curated channels.
 Advertisements- Since, Snapchat was very popular and an active Snapchat user
would receive around 150 snaps each day, it tried to position its ads between every
20-30 snaps (Malhotra, 2015).

Issue
Snapchat is making the best use of the technology and has approximately 100 million daily
active users. Until 2015, it was worth around $16 billion. There has been continuous efforts
for trying new methods of monetization but, there has still not been any substantial revenue
generation. Snapchat has shown tremendous growth and has become very popular amongst
the youth generation in the age group of 13-34 years (Gotter, 2017). The continuous increase
in the user base and high valuation has made Snapchat a big sensation and on March 2017, it
offered its initial public offering (IPO). But, despite of all this, it could not be very successful
with its IPO. When in its third quarter, Snapchat could not meet its targeted revenue, the
stocks plummeted by 20% which was a great loss for the company. Since then, the company
could not trade above the IPO price. Since then, there has been disappointing results from the
company (Wade, 2017).
Reasons for the failure of Snapchat:
 Limited and One-Dimensional experience- The nature of the content that can be
shared on Snapchat is not something of very great value but, it is just a small
conversation or engagement. It is still popular amongst the youth crowd but then, it
does not mean anything for the future. In Snapchat, the experience is limited and
one-dimensional, as there are typical stories that are shared. This will not be very
alluring in the future (Singh, 2017).
 Confusing interface- Snapchat’s interface is popular amongst young generation but
the fact is that it is very confusing. For adults especially, it is very complex and
difficult to understand the app which makes its competitors more popular
(Constine, 2017).
 Expensive Advertisements- Making advertisements are not easy and it costs extra
money for the same, as the advertisers need to hire agencies that are involved