Google marketing case

Problem Statement

Google’s future growth strategy?

How is Google going to deal with growing competition?

How is Google going to manage innovation in the future?

Google Inc.

Mission:

Organize the world's information and make it universally accessible and useful.

Google Inc. – Founded 1998

Sergey Brin and Larry Page

PageRank

IPO in August 2004

Situation Analysis

Industry

Massive internet industry with many competitors

Major competitors include Yahoo!, MSN, and eBay—all well known internet portals.

Huge opportunity for Google by offering paid listings and advertisement opportunities

Google – Q3 2005

37% of U.S. search traffic

68% of International search traffic

60% of U.S. search-related revenue

Core Competence

PageRank technology to index information based upon relevance

Google’s brand strength

Google’s innovative culture and employees

Business Model

Two initial opportunities for generating revenue:

Search services

Advertising

Advertising products that generate majority of revenues:

Google AdWords

Google AdSense

Business solutions starting to grow:

Google Apps provide powerful tools for organizations

Google Search Appliance

Unconventional approaches for managing innovation:

New areas are explored, and ideas are prototyped

Target Market

Advertisers

“ Google AdWords” drives qualified traffic to advertisers’ sites

Site Owners

“ Google AdSense” delivers ads targeted to relevant search results on publishing partners’ sites.

Businesses

“ Google Apps” provides simple, powerful tools for organizations without the usual hassle and cost.

Google Search Appliance is a scalable and secure appliance that delivers accurate search results across intranets.

Products – Internet Customers

Products – Business Solutions

Pricing

Revenue is dependent on four factors:

Listing’s coverage rate

Click-through rate

Average cost per click

Revenue split (sharing)

In late 2003, cost per click (CPC):

Overture’s average estimated to be $0.40

Google’s average was $0.30

Place & Promotion

Predominantly web based applications, tools, and services

Some downloadable desktop products like Picasa, Google Earth, Google Toolbar, and Web accelerator

Word of mouth from satisfied users

Cross-promotion strategy in some areas

Strengths

The most efficient search engine on the Internet

Brand equity - most recognized brand of 2003

Default search engine for many

Innovative culture

Comprehensive product mix

Weaknesses

Eccentric practices confuse and anger investors

Produces less relevant hits than subject-specific subscription databases

Poor product marketing

Not focusing core competency on core customers - advertisers

Opportunities

Computer literacy is on the rise

U.S trend towards telecommuting and at-home-businesses

Increasing demand for information

International market

Expand profits with diversification

Threats

Legal challenges

Specialized search engines (Gale, Lexis-Nexis, ProQuest)

Multi industry competition

Click fraud

Main Competitor – Yahoo! Inc.

Founded in February 1994 by David Filo and Jerry Yang

Acronym “Yet Another Hierarchical Officious Oracle”

Reached 1 millionth hit in fall of 1994

March 1995, Filo and Yang incorporated Yahoo!

IPO in April 1996 with 49 employees

Yahoo! now services more than 345 million users

Yahoo!

Google’s PageRank software used by Yahoo!

$5.3 billion and has 300 million monthly visitors

Offers many current products that rival Google’s

Ranks lower in market share compared to Google

Yahoo! is a portal, Google is not

SPM – Google Inc. (in millions)

Alternative 1: Market Penetration

Improve search engines

Partnerships to increase exposure

Higher number of paid listings (CPCs)

Higher CPC rates

Positives

Capitalize on core competencies in a known market

Negatives

Google’s large market share limits growth

Alternative 2: Market Development

Partner or acquire other companies to enter new markets

License search engine to desktop applications

Positives

Additional areas for growth

Negatives

How to monetize?

Alternative 3: Diversification

Portal – i Google

E-commerce

“ Web-ized” desktop applications

Positive

New markets for growing core products

Negative

New products = high risk

Could hurt Google’s reputation

Recommendation: Integrated Strategy

Integrate core competencies into new markets and products without deviating from the mission which increases its revenue through search engine and also through Ads.

Positive

Increased exposure of core products

Utilize existing paid listing model

Negative

New product = risks

Over-exposure or under-performance

Got We’ve got

Google Today

“ We’re not competing with newspapers , we’re not competing with television stations , and we’re not competing with the Viacoms of the world, we are trying to partner with them. ”