The document provides information about Facebook Messenger, including company information, acquisitions, internet industry overview, notable competitive products, product information, 4P marketing strategy, Porter's five forces analysis, problem statement, research objectives, research design, information types/sources, descriptive research design, methods of accessing data, design of data collection form, sample plan and size, data collection, data analysis including demographics, device usage, familiarity with chat apps, Facebook usage, hypothetical situation, correlation, and chi-square test, and pretest conclusion. The pretest found support for separating chat from the Facebook mobile app but identified mobile users and compensation strategies as areas to address, and recommended further large scale research.

1. FACEBOOK
MESSENGER
RESEARCH DESIGN PROJECT
MENTOR: PROF. PRADIP SHUKLA
RESEARCHER: HIEN LE

2. COMPANY INFORMATION
• Facebook Inc
• Is an online social networking service founded in 2004 by Mark
Zuckerberg
• Helds its IPO in February 2012, currently has market value of
160.4 Billion USD
• The second largest website on the Internet (according to Alexa,
April 2014)
• Has 1.28 Billion users (March, 2014)
• Facebook for iPhone, their first mobile application was released in
July 2008

3. ACQUISITIONS
Source: http://techcrunch.com/2014/02/25/the-age-of-acquisitions/

4. INTERNET INDUSTRY OVERVIEW
• Companies in the Internet Industry operate in a highly
competitive environment, subject to rapid technological
change.
• Barriers to entry vary, depending upon the particular markets
served.
• Internet companies operate on the global stage, and results often
depend upon the performance of overseas markets and currency
exchange rates.
• Long-term prospects for the industry are fairly encouraging.
• Trends such as increasing worldwide Internet usage, overseas
expansion, and the continued popularity of online advertising
ought to further benefit companies in this industry.

5. NOTABLE COMPETITIVE PRODUCTS
• TENCENT QQ: 712M active users
• Whatsapp: 465M active users (acquired by Facebook: FB)
• WeChat: 355M active users
• Skype: 280M active users (acquired by Microsoft: MSFT)
• LINE: 150M active users
• Viber: 105M active users

6. PRODUCT INFORMATION
• Facebook Messenger
• Is an instant messaging service and software application which
provides text and voice communication, developed by Facebook.
• Integrated with Facebook’s web-based Chat feature and let
Facebook users chat with friends both on mobile and main
website.
• First release: August 2011
• Stable release on Android, iOS, Windows Phone, Microsoft
Windows, and Blackberry OS

7. 4P >> PRODUCT
Facebook is a social networking website intended to connect friends, family,
and business associates.
• Structure:
• News Feed, Friend, Pages, Timeline, Like, Messages and Inbox,
Notifications, Network and Groups
• Notable features:
• Photos & Videos, Credits, Graph Search, Listen with Friends, Subscribe,
Ticker, Hashtag, Events, Notes, Platform…
• Applications:
• Smartphone integration
• Slingshot
• Facebook Paper
• Facebook Messenger

8. 4P >> PRICE, PROMOTION, PLACE
• Place
• Worldwide accessible over the Internet (partially blocked in China)
• Available on multiple devices: personal computers (PCs), smart
phones, tablets…
• Price: Free with advertising
• "If you're not paying for the product, you are the product.“
• Promotion
• Started out as a niche product.
• Allow business identities build & promote their Facebook page as an
integrated channel where they can generate awareness, influence
consumers, cultivate customers’ loyalty, and selling products.

9. PORTER’S FIVE FORCES ANALYSIS
(MARKET POSITIONING)
• Bargaining power of customers:
• The advertisers are their main customers.
• Facebook is still one of the most effective advertising channel in
digital age.
• Bargaining power of customers is low.
• Bargaining power of suppliers:
• Internet business benefits from economies of scale.
• Facebook was blocked/ hard to access in certain countries.
• Bargaining power of suppliers is medium

10. PORTER’S FIVE FORCES ANALYSIS
(CONT.)
• Threats of new entrants
• Facebook was started as a personal project 10 years ago.
• New startups with competing products come up everyday with
very low cost.
• Threats of new entrants are high.
• Threats of substitute products/ Competitive rivalry within
industry
• Users has various options to switch, varied from LinkedIn, Twitter,
Instagram… to Skype, Whatsapp, Snapchat…
• Threats of subtitute products and competitive rivalry are high.

11. PROBLEM STATEMENT
• In April 2014, Facebook announced that the messaging feature
will be removed from the main Facebook app, and all users will
be "forced" to install messenger, in order to continue to
send/receive messages on mobile devices, which "could be
very unpopular.“
• The company does not know customers’ reception on the
Facebook Messenger app and their reaction on this particular
upcoming change.

12. RESEARCH OBJECTIVES
• Measure customers’ perception on current Chat feature of
Facebook app.
• Measure customers’ perception on standalone Facebook
Messenger app.
• Identify customers’ difficulties on adapting with this change.
• Identify the time needed for customers to adapt with this
change.
• Identify the best way to improve customers’ learning curve
with this change.
• Identify the change on customers’ perception during the
transitioning phase.

13. RESEARCH DESIGN
• Descriptive Research method: understand user behavior on
Instant Messaging applications.
• Cross-sectional studies: measure users’ perception toward a
market decision.
• Continuous panels: because Facebook Inc is a multinational
company with users from many countries, the survey would be
designed and modified to match for each demographical area.
• Market-tracking studies: track the change in user behavior
toward a market decision.

14. INFORMATION TYPES/ SOURCES
• Primary data
• Taken directly from the survey result.
• Secondary data
• Taken from Facebook Inc’s user database.
• Give a better picture of user demographic

15. DESCRIPTIVE RESEARCH DESIGN
• Type of questions will be used:
• Demographic question
• Dichotomous question (Y/N Question)
• Multiple-choice question
• Semantic differential scale
• Open-ended question
• Survey sampling: choose from current Facebook users who use at least 1 of
those 2 apps: Facebook app and Facebook Messenger app.
• Question languages & styles would be familiar with mobile device owners
and would NOT require excessive knowledge on technology to answer.
• Survey method: Internet surveys. Using Google Forms for pretest,
Facebook built-in Survey feature for actual tests
• Using successive independent sample research design.

16. METHODS OF ACCESSING DATA
• Self-administered surveys (Fully Computerized Online
Surveys)
• Pretest:
• Platform: Google Forms
• Actual test:
• Platform: Facebook’s built-in Survey function.
• Survey takers: Facebook users who agree to take part in this survey
when asked.

18. DESIGN DATA COLLECTION FORM
• Type of questions will be used:
• Demographic question
• Dichotomous question (Y/N Question)
• Multiple-choice question
• Semantic differential scale
• Open-ended question
• Language: bilingual
• English
• Vietnamese

19. DEMOGRAPHIC
QUESTION

20. USER BEHAVIOR
Device Usage

21. USER BEHAVIOR
Users’ familiar level with
mobile connected devices

22. USER BEHAVIOR
Users’ usage level with chat
applications

23. USER BEHAVIOR
Users’ experiences with
Facebook product

24. USER BEHAVIOR
Users’ reactions with
Facebook’s market decisions

25. SAMPLE PLAN AND SAMPLE SIZE
• Pretest:
• At least 30 observations
• Actual test:
• Variability ( p*q): p = 50%, q = 50%
• Level of confidence: 99%  z = 2.58
• Acceptable sample error: e = 3%
•  n = 1849

26. DATA COLLECTING
• Pretest
• Survey link was created with Google Form
• I post it on my personal Facebook profile, my Tumblr page and
Facebook Group of Chapman MBA ’15 and asks for my contacts to
take it.
• Total responses received: 47
• Actual test
• Survey will be popped up in Facebook users’ News Feed. If they
click Accept, they will enter the Survey page that has been catered
to fit with users’ default language.

27. DATA ANALYZING >> DEMOGRAPHIC
• Pretest data may be skewed since it is collected on my peers, who share
similar traits with me.
• However, demographic information can be used for further Chi-square test.
57%
43%
Gender Distribution
Male Female
2%
47%
49%
0% 2%
Age Band Distribution
Under 18 18 - 25 26 - 34 35 - 44 Over 44

28. DATA ANALYZING >> DEVICE USAGE
• Most people has 2 or more devices.
• Laptop and smart phone are two most
popular devices to access Internet.
• Most familiar OS: Windows
0
5
10
15
20
1 2 3 >3
2
20
18
7
Number of devices owned
0%
20%
40%
60%
80%
100%
Desktop Laptop Tablet Smart phone
38%
87%
36%
81%
User's familiar level of each device
(%)
11%
40%
49%
Most familiar OS
Android iOS Windows

29. DATA ANALYZING >> FAMILIAR LEVEL WITH
CHAT APPLICATION
• Internet quality & peers effect are the most likely reason for
why they use/ don’t use mobile chat application.
• Most customers recognize the cost advantage of chat
application.
• Unsurprisingly, text/ photo messaging is the most used
feature, but less than 50% use free/low-cost calling even
though they are aware of it.
0
2
4
6
8
10
12
Bad data
privacy
Poor
Internet
coverage
High cost
of mobile
Internet
access
None of
my peers
use it
Other
Reasons why they don't use Chat on mobile
82%
4%
14%
Free/ Low-cost
awareness
Yes No I don't care
91%
38%
15%
0%
20%
40%
60%
80%
100%
Text/ photo
messaging
Free/ low-cost
calling
Stickers/ Theme
Most used features

30. DATA ANALYZING >> USAGE LEVEL
• Facebook Messenger is the dominant chat application.
• 63% people use chat application daily.
Never
13%
Once a week
24%
Once a day
6%
2 -5 times
per day
23%
More than 5
times per
day
34%
Frequency
0%
20%
40%
60%
80%
100%
79%
40%
28% 28%
19%
13% 11% 6%
Chat Application Use (%)

31. DATA ANALYZING >> PHONE FUNCTIONS
• People still use phone features
(calling & texting) daily but mostly
at basic level.
• This may pose a potential threat on
changing user habit since they
don’t have saving incentive to
switch to low cost options.
0
10
20
30
40
50
Yes No
Do you still use SMS
function on your phone?
0
5
10
15
20
25
30
Less than 5 5 - 10 11 - 20 More than 20
Average daily SMS
0
5
10
15
20
25
30
Less than
10 minutes
10 - 30
minutes
31 - 60
minutes
More than 1
hour
Average daily talking time
on phone

32. DATA ANALYZING >> FACEBOOK
• 41% use Facebook Messenger
application already.
• 81% will have no negative feelings if
Facebook separate Chat function
completely off Facebook mobile
application.
39%
20%
41%
Facebook Chat platform
Facebook Messenger
application
Facebook mobile
application
Web browser
Strongly
support
Support
Neutral/
I don't
mind/ I
don't
care
Against
Strongly
against
Observations 2 8 28 7 2
0
5
10
15
20
25
30
How do you feel toward Facebook's decision to
separate Chat function completely off Facebook
mobile application?

33. DATA ANALYZING >> HYPOTHETICAL
SITUATION
• Only 12% think they will probably got off Facebook due to this
decision.
• Only 8% think they will leave Facebook because they would not
like new/ updated features.
11% 8%
15%
50%
8%
8%
Reason that may cause they leave
Facebook
I don't agree with one of their new/updated
policies
I don't like one of their new/ updated features
Too much advertisement
Too much time consuming
It's outdated and irrelevant to me now
Other
46%
42%
12%
Will you stop using Facebook due
to that decision?
No
Not sure
Yes

34. DATA ANALYZING >> CORRELATION
• We assume that users’ current platform would be correlate to
user reaction toward Facebook decision, in specific:
• Messenger users will support that decision.
• Computer users, who use web browsers don’t care about that
decision.
• Mobile application users will be against that decision.

35. DATA ANALYZING >> CORRELATION
• Looking into raw data, we have 25% of people who use Facebook mobile
application answer “Yes” to question “Will you stop using Facebook due to
that decision?”

36. DATA ANALYZING >> CHI-SQUARE TEST
• We assume that there is no relationship exist between gender
and chat applications that they use, so we will test with top 5
chat applications on the list:
• Facebook Messenger
• Viber
• iMessages
• Whatsapp
• Google Hangout

37. DATA ANALYZING >> CHI-SQUARE TEST

38. PRETEST CONCLUSION
• Marketers should consider gender as one of the main factors in
their marketing plan since male and female behave differently.
• They could go through with the decision since it has high
supportive level from their users.
• However, they would need to have a good compensation
strategy and better learning curve improving plan for mobile
application users to keep them stay on Facebook.
*Further research on a larger scale with an actual test will confirm or deny pretest conclusion.

39. Q&A SESSIONS