The mobile application HeadyUp
TABLE OF CONTENTS
INTRODUCTION1. Theoretical Framework
.1 Social network theory and network effect
.2 Six degrees of separation
.3 Three degrees of influence
.4 Habit-forming mobile products
.5 Geo-targeting trend technology
.6 Theoretical concept of the financial bubble
.7 Start-up building .2. Research Methodology and
Empirical data
.1 Quantitative research method
.2 Qualitative research
.3 Single case study on the company HeadyUp1. Focus group
research questions2. The interview with CEO of HeadyUp
INTRODUCTION
online social network business is expanding rapidly because of global
need of people to communicate with each other in big distances and get
information. Users are obsessed with social networks nowadays. To check an
account in Facebook or Vkontakte became an everyday habit. The boom on social
network activity started with the release of My Space and then Facebook,
Twitter and Instagram. Before it was search engines that were used the most by
people to get information. Social networks like all big companies also follow
the idea of making profit in exchange of providing people with goods and
services. [7, p.141]entrepreneurs transfer company’s business processes online
or they establish new companies that operate only in the internet and that
don’t need physical resources to make products or services. The research paper
is very up-to-date because it describes how to establish the company that
operates online. Mobile applications became totally the new way of earning
money and they changed daily routines of people. According to recent statistics
people now use phone more than other devices to get the information. That is
the reason why mobile applications became popular worldwide. [1, p. 6]The main
term of profit-making in the Internet is advertising. After starting generating
revenue, mobile application companies start to go to the IPO and some
successful one are sold to big IT giants. All these activities made this kind
of business one of the most profitable and popular last years. [1, p.10]object
of the research is the mobile application HeadyUp that is location-based social
network enables users to see and share pictures or videos with other people
around on the map. Additionally, the user can add to his or her content the one
out of 52 million songs.problem of the research can be formulated as a question
how to create a startup IT Company and maintain it in after-launch phase to
achieve success? To find solution to this problem several issues are analyzed
such as the start-up market situation, startup financial bubble, new trends in
mobile applications market, development of the application from the idea to the
product or service, monetization model of the product or service, approaches
how to attract investors and manage the company to receive revenue, how to gain
users, how to market the product in order to attract and retain attention of
users etc.thesis focuses on the process of the development of the idea with the
end product- internet application. The subject area is mobile applications. The
main objective of the thesis is to implement the plan for HeadyUp on how to
develop the product for the future success and create the paper itself in a
form of guide that will be a visual tool for young entrepreneurs that shows how
to build mobile applications with the help of step- by -step instruction.research
is started with the theoretical part where the main postulates and available
information about start up market are included. The author discusses social
network phenomena, online social networks history, the concept of the financial
bubble and prospective startup bubbles, habit-forming mobile products, startup
building process, geo-targeting technology, descriptions of different marketing
and strategic tools to analyze company performance.all, the empirical part is
written which consists of quantitative, qualitative and single case study
research methods. Quantitative and qualitative researches are conducted to
prove some parts from the single case study and to develop solutions for the
company how to improve the performance in the after-launch phase. The single
case study shows on the real example of the company how all processes were
established and company was released.doing the research there is not much
literature related to the topic or previous research was found by the author.
There appeared the lack of scientific information because social network
business is a quite new area. In the internet there is no serious scientific
research which is related to the research topic. There are only available some
particular researches concerning usage, monetization etc. by global marketing
agencies. This research is written about the innovative type of business-mobile
applications, especially mobile social networks.literature which was used to
make the research were books, marketing agencies researches, articles from
scientific magazines and journals and online websites related to the topic. The
chapter about habit-forming products is based on the book of the American
author Nir Eyal. The author analyses the phenomena why people are addicted to
some products and services and to some not. Nir Eyal introduces the reader the
Hook model or in other words 4 steps process companies use to build customer
habits. This book became really popular among the programmers from the Silicon
Valley because it reveals the secret of how such big IT companies like
Instagram, Twitter, Pinterest gained so many users. [4]bestseller book called
“The Power of habit: Why we do what we do in Life and Business” was used to
implement also the chapter of the habit-forming online products. The author
made the study analysing daily habits of people. He proves in the book the fact
that habits predict not only life-changing events but also the behaviour of
consumers. [40]
The
last book that needs to be described is written by Larry Downes and Paul Nunes
is called “Big Bang Disruption: Strategy in the Age of Devastating Innovation
<#"871078.files/image001.gif">1.1- The Hook. [4]
1.5 Geo-targeting trend technology
targeting is another trend that helps businesses to find key customers
for their products online by the location. This tool was recently implemented
in social networks such as Facebook or Twitter, where you can select people by
location, age, gender, languages, interests and connections. Many companies can
target their ads to specific group of users in social networks, so that the
advertisement campaigns would be more efficient. Additionally, geo-targeting
technology can change shopping experiences in the game like way. As an example,
there is the application that big IT company is currently developing that
influence customers to buy specific product or service in the moment of
purchasing. The company offers to install special devices in the point of sale
so that the customer can see through the application on which products there
are offers in the enterprise or if there are new products in the shop etc.
Geo-targeting technology is the new way of marketing, it helps to deliver
marketing messages more suitably timed aligning with customer’s daily routine.
In comparison to traditional ways of advertisement it’s possible for the
enterprise to manage the show time, the quality of the ad, “in the moment”
advertisement and in addition it helps to analyse the target customer. The only
one thing that makes this technology doubtful is that people are afraid to be
controlled by location. But if the company makes the application in the playful
format this technology can become the new way of marketing. [27, p. 124]
1.6 Theoretical concept of the financial bubble
is vital for entrepreneurs to get to know the current situation in the
market if they want to start business. It is important to define whether the
sector rises or stagnates in the current moment to understand which steps to
follow.aim is to learn the situation in the start up market, gather and
structure existing theoretical data for the future analysis of this topic.
First of all, many people who are interested in this area are concerned that
startup bubble exists and it is in the hottest point now. For example, in 2014
there was $86, 7 billion invested in 6,507 deals. In comparison in 2013 there
was $53, 5 billion invested in 6551 deals. This statistics shows that the
number of deals decreased from 2013 to 2014 year but the amount of capital
invested in startups raised in 2014 year. Many pioneers in the market feel the
positive climate and create new startups that have no solid fundamentals. The
ones who are increasing the price are the early-stage hedge funds, institutional
investors and late-stage investors from US. [8] Other predicts that the market
is not cooling down; companies with solid fundamentals will still bring the
profit and will raise high amounts of capital. [24]analyse the current
situation in the market it is necessary to gather theoretical information about
previous financial bubbles and crises. First of all it is important to outline
the definition of the financial bubble. “Financial bubble is a situation in
which prices for securities, especially stocks, rise far above their actual
value. This trend continues until investors realize just how far prices have
risen, usually, but not always, resulting in a sharp decline. Bubbles usually
occur when investors, for any number of reasons, believe that demand for the
stocks will continue to rise or that the stocks will become profitable in short
order. Both of these scenarios result in increased prices.” [32]back to history
there can be described one of the most famous examples - the dot-com bubble of
1990s. That time there was huge amount of investments coming to dot-com
companies that had IPO’s of hundreds of dollars per share. Some of these
companies never made a profit or produced revenue. Investors influenced by the
theory that internet companies should expand to gain new customers and at the
same time increase its market share, invested billions in them. Shares of
dot-com companies were traded in NASDAQ, which also rose to the record point.
But suddenly in 2000 the bubble burst and NASDAQ companies lost more than half
of its value. The main reason of dot-com bubble collapse was that there were
too many companies that came to the market, too much investments and too fast
realisation. [8, p.178]we look to current situation many start-ups are not
generating profit or revenue like it was in dot-com bubble. The main reason is
that applications do not have well-made financial models. The idea that
companies should gain users and expand customer bases and data is still in
place. Large companies such as Facebook, Twitter or Instagram buy small
start-ups to dominate in the market and control the traffic and consequently
profits. Giants are fighting for the traffic because every second the user
spends in the application or on the website brings company the profit which is
received from advertisements. [ 10, p.188]it is written in the financial
dictionary, “Bubbles usually occur when investors, for any number of reasons,
believe that demand for the stocks will continue to rise or that the stocks
will become profitable in short order. Both of these scenarios result in
increased prices.” [32] The start-up bubble has already occurred and currently
it is on the peak point when prices are so overvalued that many interested
groups or individuals stop to believe in rationality of the prices of products.
It can be predicted that there would be so many applications that generate a
huge traffic that will be already owned by big internet companies such as
Facebook or Google. Taking into account that users can’t be present at the same
time in all applications even though the diversity of interests, geographical
diversification, preferences to different styles etc., and all the traffic will
be shared between giant companies and it would be difficult to gain auditory.
Only unique and revolutionary products will be able to compete and get the
market share. [8, p.65]is clearly seen that the interest of venture companies
in the new startups is high and companies are willing to invest in mobile
products as it was in dot-com bubble in 90s. Many characteristics are matching
with the past burst of the bubble but the difference is only in the nature of
products. Because this sector is new and developing the overvaluation is likely
to happen. Some startups are based on great ideas with good financial models
are likely to be on top and with an opportunity to speculate with the price of
the company. [8, p.67]or later every bubble collapses as any other previous
one. It is impossible to change such scenario and it is proved by the past
experience. Nowadays the industry is on the top of the wave and it’s likely
that big companies are going to make more acquisitions so there is favourable
moment to join the game.
1.7 Start-up building
of the plan of actions is the essential part of company before it starts
operations. It’s important because it helps to identify risks and opportunities
and decide whether it’s profitable to make the idea working or not. Usually the
plan of startup supported with different researches, calculations and examples
of other similar companies. [6, p. 220]first step that every entrepreneur does
to generate ideas is becoming aware of new businesses and new trends. As this
research about IT business, the best way to get this valuable information that
can be a basis for the future idea is to read popular IT blogs, IT magazines or
IT articles in famous business magazines and new books about this topic.
Currently Business Insider, TechCrunch, Mashable, Springwise, Enterpreneur etc.
are most visited websites of getting aware of the market. Another way is to
visit different relevant to future business events, where you can get
motivation from successful entrepreneurs, get to know current trends and make
valuable contacts. While accumulating information relevant to the chosen field,
it’s advised to put down notes of every idea that comes to mind. [9, p.331]way
to find an idea is to make a market research on the topic of interests that can
give an understanding and idea of the product that is missing in particular
market sector. Travelling is also one of the chances to come up with an idea or
see the idea that can be reworked and brought to another market. [26], after
having the idea in mind an entrepreneur should make marketing research, which
can be implemented with the help of the industry associations, periodicals,
up-to-date web articles, governmental organisations. Then through the marketing
research there can be identified target customers that the company plans to
serve with its business idea and make appropriate questionnaires or surveys for
the targeted sample .[5, p.341]can be aimed to determine the potential market,
to measure the competition, to test a product or service or to test positioning
in the existing market. If the product is tangible, the sampling procedures can
be implemented to identify positive sides and drawbacks of a product or
service. If a product is intangible such as mobile application or website it is
advised to make a beta version of the mobile application and ask targeted
audience about the product. The clear communication from the key customers can
be extremely valuable during the development of the product. Through marketing
research the understanding of the level of competition and competitors will be
available. [5, p.224]next step after marketing research is the development of
business plan. Standard business plan consists of eight parts such as company
analysis, industry analysis, competitive analysis, customer analysis, marketing
plan, management team, operations plan, and financial plan. In company analysis
the basic information such as products or services description and future
development are described. Industry analysis includes the information about the
market size and which trends affect the market. Creation of marketing plan
helps to analyse target customers and make adapted to them marketing channels
and tactics. Marketing plan can include SWOT analysis or PEST analysis. Then
after marketing plan the implementation of team management plan follows. In
other words team management plan is the company structure with key workers and
roles they will make. Also while building the team it’s important to decide
whether to establish the Board of Directors, to allocate the cofounders or not.
In addition, the hiring plan is ought to be made. Meaning that the CEO of the
company should decide what kind of workers with what kind of roles he should
hire to execute the smooth performance of the company. One of the last parts is
the operations plan where the step-by-step actions are described which come
along with the company strategy. Finally, in every business plan financial part
is vital because every start up follows the aim of the profit making. In
financial plan income and cash-flow statement, balance sheet, break-even
analysis etc. are presented. [27]plan is not only the way how the CEO of the
company sees his company but it’s also the information for the potential
investors, employees, suppliers and developers’ etc. This tool can help to
identify problems to solve in the company and help to make the vision and the strategy
of the company. [5, p.73]it can be found in the official website of WTO
concerning legal protection of the application, “Intellectual property rights
are given to persons over the creations of their minds. They usually give the
creator an exclusive right over the use of his/her creation for a certain
period of time”. [29]defining intellectual property rights, WTO broadens the
definition:
“The rights of authors of literary and artistic works (such as books and
other writings, musical compositions, paintings, sculpture, computer programs
and films) are protected by copyright, for a minimum period of 50 years after
the death of the author.” Mobile application can be allocated to computer
programs, so that the application is protected from copyright. [29]studied
different success stories of IT companies such as Google, Facebook, Twitter,
Instagram the author of the research created an unofficially excepted set of
rules on how to plan the emerging project that the reader can follow in every
success story. Mobile application launching plan consists of 3 periods:
pre-launch period, launch and after-launch. [13]launch period is the time of
the development of the IT product, establishment of funding and early marketing
research. During this phase founders of the company follow such steps:
Marketing research
Keyword research
Creation of the monetization strategy
Social media networks presence
Creation of press-release
Description of the application
Translation of the application to needed languages
Implementation of Analytics
Negotiations with influencers (magazines, journals, blogs
etc.)[13]period is launch, which is the short time when the product is in the
application market and people can already download it. The most important
activity during this phase is marketing, because it can influence the further
success of the application. During this period there should be made following
steps:
Announcement to influencers about the new product in the market
Social media monitoring: up-to-date information, regular updates
Social media campaigns
Application store optimization
Sending of launch press-release
Launch Mobile Ad campaign
Outreach to PR database of 1,4 billion[13]launch period is the
time when marketing campaigns of launch worked out and first users started to
use the application. Actions on this stage are unpredictable and this stage
should be analysed as a unique case for every company. Usually steps lie in the
fact of maintenance. Entrepreneurs follow such steps:
PR and marketing campaign optimization
Description change and optimization
Building positive and strong reputation
PR outreach
Social Media fun database
Marketing analysis-new features development
Outreach to 300+ reviewers
PR-material release [13]successful IT startup company goes
through the process of funding. The standard funding process consists of
several stages such as idea stage, co-founder stage, family and friends’ stage,
angel investors’ stage, venture capitalists stage, IPO stage. In the first
stage, the person comes up with the idea that he or she believes is going to
work in the current reality. The potential founder of the company starts to
work on it or in other words starts to create the value of the company. Later
when the company is registered the value would be transferred into the equity
of 100%. [29]the creator of the idea realises that it takes twice times more to
transform the idea into physical product or service if he or she works alone,
the creator finds the cofounder who is smart and motivated enough to execute
the project. They work together; add the same value to the project. (see Figure
1.2) But the cofounder in comparison to the employee receives not the salary
but the percentage of the company. He makes 50% of work and he receives 50% of
the company, because he or she equally takes the same risks as a founder by
spending own time and skills for building the product. [29]
1.2- The process of startup funding [29]
next stage is considered to be the start of funding. First investors of
the company most likely are the family or friends of the owners of the idea.
(see Figure 1.2) Firstly, until the company is not registered the owner has no
legal right to offer the public to buy percentage of the non-existing company
in exchange of money. Secondly most of accredited investors, people who have 1
million dollars in the bank account or who earn 200 000 dollars annually, won’t
be ready to take a risk of investment in not established company. Most of the
times in the family and friends’ stage, investors buy big percentage of the
company with small amount of money. [29]receiving first money for the
development of the product cofounders register the company. The registration
can be made through the online service or through the lawyer that is considered
to be more expensive. After registration the company has an equity that is
split among 2 cofounders and a friend or family member. Then the common stock
is issued. [29]increase the value and the price of the company and not to admit
the start up to go broke, the owners start to search for the angel investors.
So-called incubators, accelerators often provide the coming startups with money
and resources in exchange of the percentage of the company. In the early stage
of developing startup investors are not likely to invest a lot of money but
they ask for the big percentage. If the idea of the startup is valuable and
they see the potential owners can estimate their project as 1 000 000 dollars.
The accredited investors are likely to invest 200 000 dollars. [29]
1.1- Calculation of the percentage of the company that the private
investor receives (Management team of HeadyUp)
*Pre-money valuation = $1
000 000 *Angel investment= $200 000
|
Post-money valuation= $1
000 000+$200 000= $1 200 000 The angel investor %= $200 000/$1 200
000=0,167=16,7%
|
company grows rapidly and now it’s valuated as $1 200 000. To grow
business and to increase the price for the enterprise, owners attract venture
capitalists. In this stage the calculations of the percentage that investors
receive is the same as with angel investors. For example the venture capital
company values the company as $4 000 000. Then the owners start to offer other
venture companies to buy a part of the company. And this round can repeat until
the big company wants to esquire the startup or there will be no investments
and the company dies or the company decides that it should go public. [29]last
stage that the startup company can do is to go public or in other words to
offer its shares in Initial Public Offering. When the company offers to buy its
shares in IPO regular people can buy them. Accredited investors can buy only
restricted shares that they can’t sell in exchange of cash. Only after the IPO
these shares became unrestricted and they can be converted to money. During the
process of the IPO the company appoints the bank to be the underwriter, the
bank that maintains all paperwork and sell the stock to wealthy clients. The
underwriter receives 7-8% of flow raised in IPO. [29]way to make a profit out
of mobile applications can be described with the help of the model of
monetization, invented at Harvard in 2013. According to gathered statistics,
each user who downloads the application can be expressed in monetary units. The
more users are using the application, the higher the price of the startup,
which in the long run could be sold with the high price to huge IT -
Corporations [18]way how to earn money is to have ads in the application. There
is a new monetization model which is used by Google and other search engines in
order to have revenue from advertising. According to Interactive Advertising
Bureau, an impression (view) - is "a single display of online content to a
user’s web-enabled device." In other words with impression we can
calculate how many times the user sees the advertising whether it’s clicked on
it or not. Cost per Impression method is widely used for advertisement in
applications. CPM is an internet advertising metric which means the price
company pays in terms of the number of impressions made. Normally companies pay
the price for 1000 impressions so that it’s easier to calculate the price.
[18]process of buying online advertising consists of several steps: setting the
budget based on affordability, choosing between automatic or manual number of
views for achieving advertising goal and the schedule for ad campaign. Then the
application automatically calculates the Average CPM based on target audience
size and schedule. [19]depends on country where the advertisement is viewed.
Definite CPM for the particular application is difficult to estimate before the
company started to make revenue but it is possible to predict the CPM, based on
official average number. According to the research made by marketing agency it
was found out that average CPM for 2013 year in Europe and US was $1,46 and the
average number of impression of one user in a year is 14400 in the popular
application, in average application in one month is 300. [19]metrics are used
to calculate the efficiency of different advertising campaigns. To calculate
the efficiency the researcher should measure the number of users before the
start of the campaign and number of users after the end of the campaign. The
difference, which is the number of users should be multiplied with average
impression in one month and should be multiplied with price for 1
impression.[19]
1.2- The formula for calculation of the revenue received from mobile ads
in the application [19]
Revenue=Number of
users*number of Application Impressions/1000*eCPM
|
the product is already made and launched in the market or is going to be
launched in the market entrepreneurs start to brainstorm ideas how to advertise
and make familiar this product for prospective users. During this stage most
common practice is to implement marketing plan that directs the company to
successful performance. [16]first stage of the plan is to research the company
with the help of SWOT- analysis if the company plans to expand to new markets.
While doing SWOT -analysis researches analyse company’s external and internal
environment. Internal environment often classified as strengths (S) and
weaknesses (W). External environmental factors are opportunities (O) and
threats (T). Strengths from the SWOT can be defined as patents, brand names,
good reputation, and cost advantages from using know-how, exclusive access to
natural resources, and access to distribution networks. [16]can be often
described as lack of strengths, such as lack of patent protection, weak brand
name, bad reputation among customers, high cost structure, lack of access to
best resources and key distribution channels. External environment analysis can
bring some new opportunities for the company as well as threats. Taking into consideration
opportunities, there can be identified unfulfilled customer need, creation of
new technologies, removal of international trade barriers and also loosening of
governmental regulations in the new market. [16]can be defined as negative
factors that influence on company performance and lead it to bad results. There
are some examples of such threats such as change in consumer tastes and shift
to competitor’s products, emergence of substitute products, new regulations of
government, increased trade restrictions with other countries. [16]conducting
marketing research marketers having identified key customers start to build
marketing plan for the product. One of the best tools researchers use to bring
the new service to the market in 7P Marketing Mix that enables company to
position the product or service and optimize the impact with the target market.
Marketing Mix consists of 7Ps: Product, Place, Price, Promotion, Physical
Evidence, Process and People. After analysing the product on these 7 criteria there
can be implemented the strategy for positioning of the product in the market.
[37] Concerning processes in mobile marketing is the analysis about the
delivery to the customer; People component exists in mobile application area in
a way that workers are an asset of the company who are also involved in smooth
performance of business processes. Evidence component is about the additional
significance or warranty that the service was delivered and visual
characteristics. [38]next step is to draw the picture of the key-customer of
the company. First, to identify the key-customer it’s important that manager
imagines himself or herself in the place of user. Then the marketing manager
makes the marketing research analysis. [36, p.199]presence of the company is built
on the functional and informative website with good description of the
application and friendly design. The feature to download the application should
be build in the website and should redirect the person to the Appstore page of
the application. The design should be simple with one aim- to make person to
download the application. Contact details and auto-download press-kit should be
placed on the website. [14]successful web presence company should make a social
media plan. Standard social media plan includes presence and engagement of the
activity in popular social networks such as Facebook, Twitter, Vkontakte (in
Russia). Social network pages should have a logo of the company, the link how
to download the application and new posts every 2 days. Researchers found out
that the best time for posting is 5 pm. Then the marketing manager should start
answering people’s questions; express the opinion of the company. [14]the
company image is highly dependent on the image that the CEO of the company
shows in the social network. It’s very important that CEO has well-organised
profiles in Facebook, Twitter, Linkedin and Vkontakte. After that marketing
department should analyse the market and define target customers their wants
and wishes to adapt the product. [16]of the best ways to introduce the business
for investors and public is to visit special events. The lack of time and money
together with benefit business receive from attending events make the
entrepreneur to put priority and skip some events. That is why it’s essential
to have well-organised networking strategy. The networking plan is based on
answering 3 questions: who, where, whom exactly. Networking strategy is built
only after the company started to perform. To get to know who the prospects of
the networking strategy are, the company should take a look at the list of
clients that it had before. First of all, the entrepreneur should define from
which industries investors or partners came into business, how long have they
been investing in IT start-ups etc. But if the company works mostly with
consumers the profile of the ordinary customer should be created. To answer to
the question where to meet prospects, the creator of the start-up should
analyse who exactly he or she wants to meet. The small business owners most of
the time are in contact with Chamber of Commerce or Local Business Association
or if the company itself is small business, it can contact these organisations
for developing more referrals to the business. To find representative from
corporations the best way is to visit volunteer, non-profit group events such
as Aiesec events. [2, p. 256]about whom exactly the entrepreneur should contact
there is the 6 degrees of separation theory in place. The more contacts the
person makes the more close he or she will be to the desired and needed
contact, according to Milgram research. The one feature is that the startup
representative should ask specific questions and talk about specific area that
will lead him or her to the person they are searching. For example, people
having known that someone made an online application and wants to find
investors will advise this person to talk to Mr. or Mrs who know other
interested in this area people. To make a good networking strategy it’s
important to be surrounded by different business contacts. It’s very possible
that through one contact the businessman can find another highly valuable
contact. [2, p. 76]
Chapter 2. Research Methodology and Empirical
data
2.1 Quantitative research method
collected quantitative data is useful for the marketers and creators of
IT startups, it will give the clear understanding of the mobile applications
market, marketing tools used to promote the product, the Appstore users
statistics. All the written information would be corresponding and approving
with performance of the real company.the quantitative research the author tries
to find out what kind of applications people use the most, how much times on
average people spend while they are using not only Facebook but also other
social networks, how to keep users involved in using the application etc. The
findings sum up information not only about one social platform but about many
others at the same time. These data helps to adapt the application in the best
way to potential users.is defined as a complete set of elements: persons or
objects that possess some common characteristic defined by the sampling
criteria established by the researcher. In a research, the most essential as
well as the first step is to identify the population. The sub questions
relevant to the total population are, how big the total population is and what
are the common characteristics and the differences between them. The right
choice of the population will make the helpful and directive foundation of the
next step- sampling. [25]is a selection of the representative elements of the
total population. Five different stages are involved in the sampling process in
order to obtain the right samples. Firstly, deciding the total population about
the research, then identify the measurement of the samples or the common
details which can be used for the description of the samples. Next step is
selecting the suitable sampling method. After that, the sample size can be
ascertained. Finally, there should be implemented the sample plan. [25]sampling
method is also an integral part of the whole process, which can be divided into
two big categories: probability sampling and non-probability sampling. The
former one means that all the elements of the total population can be chosen to
be sampled, in contrast to the later one, indicating that only some of them
have the chance of being samples. A probability sampling includes Simple Random
Sampling, Systematic Sampling, Stratified Sampling and Cluster Sampling. Non-probability
sampling contains Quota Sampling. [25]the research Simple Random Sampling
method was chosen because each subgroup of the population of every size has an
equal probability of being chosen as the sample. The sample of the research is
different age, origin and occupation people who have and use smartphones of
different brands. There were 104 respondents that participated in the survey.
[39]that meets the objective of HeadyUp was developed with regards to the
single case study analysis. The questionnaire was published in social networks:
Facebook, Twitter and Vkontakte. Also data was gathered through survey in Swiss
and Finnish Universities in the way that students should have filled in printed
copies of questionnaire. The data obtained through quantitative research was
analysed and there were received certain results.first question respondents
were asked was “Do you have and use smartphone?” The purpose of these questions
is to eliminate respondents that are not in the sample. Through this question it
was identified that all users that took the survey had a smartphone that they
actively use.next three questions were to find out whether users download new
applications or not, what the most influence their choice- to understand which
marketing channel to choose to gain users, to identify whether they download
application randomly or study it before the process of purchase. They are
sounded like: “How often do you go to the Appstore, Googleplay or Androidmarket
to download the new application?” The next question was: “What does grab your
attention and make you download the application in the preview of the
application? What media do you use to get to know the information about new
applications in the market?
1.3-The frequency of downloads of applications
was found out that 55% of respondents download applications once a month,
20% every week, 15% every day, while 10% once in half a year. (see Figure 1.3)
As for features that the most influence the users to download the application
in the Appstore are two factors: the application is for free and idea is fresh
and interesting. Then the right description, good quality pictures and reviews
influence and trigger whether to download the application or not. (see Figure
1.4)the next questions it was identified that Word-of-mouth and Appstore trends
such as rating and reviews are the most influential factors that make the user
to find and download the application. Then next 2 most influential factors are
articles in online versions of popular magazines and journals and ads or posts
about the application in other social networks. Less influential are video ads,
e-mails, QR-codes and printed media. (see Figure 1.5)
1.4-The most effective Appstore optimization tools
1.5- The most effective advertising channels.
next question was made to identify how many Apple store and other markets
users take part in the survey. Appstore users are more relevant to the research
sample because the application works only on Apple devices. In the future
company wants to adapt application also for Android market. The question was:
Which mobile platform do you use to download the application? In the survey 65%
of respondents who download from Appstore , 35% of respondents are ones who
download from other application markets. (see Figure 1.6)that survey
respondents who use Appstore were asked the question: “Do you follow the
application store trends such as the top free/ paid applications, the
application of the week to download new applications? The question was made to
identify whether this factor is the most influential on users’ choice or not.
45% of respondents replied that they don’t follow the Appstore trends while 55%
said that they keep themselves up-to-date with trends in Application. (see
Figure 1.7)
1.6-The amount of users that took part in the research
according to the market they use to download application.
1.7-The influence of Application trends on users’ choice to
download the product
question was made to identify the most popular category of the
application: “What type of applications do you use most often?” On this question
84 % of respondents replied “Social networks”, while other categories that
interest users are games, news and photo& video which was 6% of respondents
each. (see Figure 1.8)
1.8-The most downloaded and used types of applications
that there was asked the set of questions concerning the usage of social
networks such as “How many social networks do you have and use on your
smartphome?”, “How do you feel when you decide to login or join a social
network?” and “Why do you use social networks?” Concerning the amount of
networks that people have and use on their devices there were identified
several results: 42 %of respondents have on average 2-3 social networks, 32% of
respondents have 3-6 social networks, while 16% have more than 6 and 11% just
one social network. (see Figure 1.9)’s known that social networks are
habit-forming products, so in this research we found out about the feeling that
triggers the user to come inside the social network. 39% of respondents feel bored
and 33% feel curious before they decide to login, while 17% feel happy and want
to share something, at the same time 10% feel the lack of news. (see Figure
1.10)
1.9-Average amount of social networks on one user’s smartphone
1.10-The feeling that users have when they decide to login to
social network
question was about the reasons why people use social networks. Most of
the respondents use it for communication with friends and relatives, then
educational reason, after that social network as like a time-killer for some
respondents, and then the reason of using is to get some news. The weakest
reason is self-realisation. (see Figure 1.11)2 questions: “Do you delete
application from your smartphone?” and “Why do you delete applications?” They
were dedicated to deleting process of the application. It was created to
identify whether people delete applications or not and what are the reasons why
do they delete applications. All respondents replied that they delete
applications. The biggest reason for deleting applications is too much
advertising. Second reason that made them to delete is idea of the application
is not the same as in the description or the person is not satisfied how idea was
replicated. Another reason why users delete applications is the problem in
functionality- the application is too slow or with many bugs. Also 5 % of
respondents mentioned the fear of being controlled with location by the
application. (see Figure 1.12) At the end there were asked personal questions
to group people according to age, place of living and occupation.
1.11-Reasons for using social networks
1.12- Reasons for deleting applications
2.2 Qualitative research
research is a type of scientific research which traditionally seeks
answers to questions, collects evidence, and produces findings that are limited
by boundaries of the study. Additionally, it helps to understand the perception
of the local population of the presented topic. Qualitative research is
essential when you want to get opinions, values, social environments and
behaviours. The use of qualitative research in connection with quantitative
helps to research the data obtained from quantitative research more precisely.
Qualitative method in this case gives better understanding of the results from
quantitative research.are three most typical qualitative methods that
researches use such as participant observation, in-depth interviews and focus
groups. Participant observation is used to collect data from behaviours that
appear naturally in usual environments. Another method is in-depth interview
which is used to collect information about biography, personal stories, and
experiences concerning sensitive information. The last type is focus group
which is effective in obtaining the information from the specially sampled
group of individuals. Through the quantitative study the researcher obtains
data in video, audio format or record with the help of field notes.the case of
HeadyUp were used two qualitative methods- focus group and in-depth interview.
The focus group research helps to understand deeper from opinion side the data
obtained through quantitative research. The focus group interview consisted of
5 questions on which the researcher received open answers. There were
interviewed 6 people at the same time in the format of open discussion. The
second part of focus group research had the goal to test the application and
find some problems or difficulties the users face while using it.quantitative
method- interview was used in the research. The SEO of the company was
interviewed where opinion and personal questions were answered to build the
motivation strategy in the future.group research took place in the company
“Vgarazhax.ru” which is located in Saint-Petersburg, Russia. 6 people participated
in the focus group discussion. All participants are Russian citizens. 6
participants of the group were male. They are males from 22 to 26 years old.
The Figure 1.13 shows age structure of the focus group. (See Attachment 2)
1.13-Age and gender structure of the focus group
background of the participants is shown in Figure 1.14. All of the
participants are University graduates. 5 of them have Specialist degree (5
years) in Engineering, 1 has a Bachelor degree in IT.’ occupation is presented
on the Figure 1.15. Most of the participants are working full time. One is part
time employee.
1.15- Participants occupation
1.16 presents the data about first description that comes to their minds
when they think about the application to download. All of the participants said
that they download normally famous or popular applications. Also 3 of them put
the “new” as a descriptive term for the applications that they choose.1.17
shows influential factors that make the participant to download the
application. The triggers for action are most of the time friends - 5
participants agreed. Then 3 participants mentioned reviews of the application,
another one other social networks and 4 others said that rating in the
Application helps them to choose the right application.
1.16- The description of qualities that application should
have to be downloaded
1.17-Factors that influence people to download the
application
next data concerns the importance of the brand image of Swiss IT
companies while choosing the application. All participants don’t know any
applications that were produced in Switzerland. 1 participant replied that he
downloads only Russian or American. Others don’t pay attention to the origin of
the application. (see Figure 1.18)
1.18-Awareness of the “Swiss made” brand for mobile
applications in Russia.
question was about the most important features that application should
have for successful flow of new users. 2 participants of the interview said
that the most important is functionality and 2 -simplicity. Another 6 answers
were that the application should be free of charge. (see Figure
1.19)respondents have negative opinion concerning the future of geo-location
based applications. The reasons for stop using location-based applications are:
it’s not new, not innovative idea (4 respondents), lack of time (1 respondent),
lack of motivation(1 respondent). (see Figure 1.20)
1.19- Features that the application should have to increase
the traffic
1.20- Reasons for not using location-based applications
second part of focus group research was consisted of questions concerning
the testing of the application. Respondents downloaded the application from the
Application, tried to use it and then joined the discussion.First question was
about the opinion on the applicationearance of the application in the
Application.respondents agreed that pictures describing application in the
Application are standart, neutrial and they don’t feel anything negative about
people on pictures. Then 2 of 6 respondents mentioned that all text in pictures
is in English, which brings misunderstanding about the language of the
application. The respondent added that if the application is not translated in
Russian, it won’t be popular in Russian market. Another respondent admitted that
pictures don’t trigger the person to download the application, so that he will
read the description before the decision to download, adding that the
description should be also translated in Russian market.next question was about
the logo that applicationears on the screens of the Iphones when you download
HeadyUp application.are satisfied all of respondents. 3 of respondents compared
the logo with Google maps logo and found similarity.2 others said that the
white symbol inside the logo should be bigger.third question discusses the idea
of the application whether respondents find it interesting or not special.
Respondents were neither excited nor disapplicationointed with the idea, they
said that the main focus application should make on gaining more users. 4 of
them admitted that if the application is popular with a many users they will
download it. Other 2 respondents think that if the company makes an influence
on advertising the application becomes popular.question was about the opinion
of the design and functionality of the application. All respondents like the
design, describing it as standard and simple. As for functionality many people
in Russia still use the old IOs system versions starting from 7, because they
don’t like the design of the new version and the speed of the performance.( see
Figure 1.21)fourth question was about the features that should be developed in
the application to make it more engaging. The first respondent liked the
application like it is now and said that there is nothing to change. 4 other
admitted that in the application should be implemented the possibility to chat
with the person you like.4 other opinions were about changing of the direction
to be a dating platform rather than news application. Another opinion was about
implementation of the friends request feature which brings the opportunity to
decide whether to chat or not with the person you like. (see Figure 1.23)
1.21-Design and functionality satisfaction
1.22- Features needed in the application for users’
attraction and strong engagement
1.23- Users’ satisfaction of design and functionality
2.3 Single case study on the company HeadyUp
research paper is written for the company so that the best method to use
is single case study. One of discoverers of case study research, Robert Yin
defines single case study as “an empirical enquiry that investigates a
contemporary phenomenon in depth and within its real-life context, especially
when the boundaries between phenomenon and context are not clearly evident”.
[31, p.65]single case study was chosen for the thesis because the researching
topic is quite deep and the object of the research is unique and specific. In
other words, as like scientists prove single case study is an intensive study
of one unit. In the case of this research the one unit is company HeadyUp.
[36]case study gives the information how to come up with the idea of the
startup, where to find potential investors, where to produce, analyse what kind
of revenue model is better to use, how to monetize the project, how to
calculate the evaluation, how to establish the company in Switzerland, how to
bring the product online, how to attract and retain users. The real example of
the company proves that the information obtained through the HeadyUp case study
is reliable.is a location-based photo/video-sharing platform that focuses on
allowing users to share photos and videos of what’s happening around them with
those geographically connected to them. The platform allows users to share
places to go, things to do, current happenings, and worth-sharing moments with
those around them. This enables and promotes users to have interaction with those
around them in real-time. The user’s engagement with HeadyUp is then translated
into over 70 real-time metrics that provide businesses a more accurate
understanding of the customers around them.idea of a startup is unique because
there are no more alternative applications that can link one person to another
on the map, not being a dating platform. Many features can be compared with the
application Instagram, but it is not based on the location and it is not
possible to see what is happening in the world on live map with pictures. In
addition HeadyUp can be used as a means of obtaining real news from ordinary
people as pictures can be done only when the location is shared and application
doesn’t allow using filters. With the wide spread of false information in the
social media and mass media people don’t trust the information they see and
hear. The application HeadyUp can help people to start finding out what is
really happening in the world around them.24 hours concept is that the
application deletes automatically all posted in the map media after 24 hours.
There are two reasons for incorporation of this concept: HeadyUp delivers to
users only fresh news and media because otherwise there will be not enough
place in the map to post all media without deleting. Secondly, company minimize
its expenses on payments for the online storage in the server.there are many
location-based applications in the mobile-market. The most popular are
Foursquare, Google maps, Instagram. Giants of IT industry introduce new location-based
features in their internet products like Facebook or Vkontakte. After the
researcher conducted the interview with the CEO of the company, she found out
how he with his cofounder found the idea. The idea came into mind of one of
founders by accident. Basically, the creator found the solution to the problem
that he discovered in reality. According to the answer of one of the questions
of the interview, the CEO of the company came up with the idea when he was in
one of the Swiss phone retailer’s shop. He took a picture on the sample phone
in the shop and next day he came again and saw some other people’s photo and he
got the idea. He realised that he can make an application where everybody can
see pictures depending on the place he or she goes. He said: “Every place is a
special moment and you share this moment with other people”. (See Attachment
2)the law, the company should set the minimum number of founders, which can be
either individuals or representing the interests of company. In the company
HeadyUp two founders - individuals who have developed a charter company and one
shareholder. In terms of investment, incorporated company is the most
profitable to invest capital in. Since the incorporation is the subject to
public reporting, company HeadyUp discloses data on the number of shares and
the evaluation of the company online. From the official sources it’s known that
the company's share capital is CHF 100,000. The company has issued 10,000,000
shares with a nominal price of 0.01 Swiss francs per share. Shares are
distributed between the investor and the company's two founders.the seed stage
or introduction, the company consisted of two founders and a computer developer
of the project. During the seed stage of the project was developed a prototype
of the application, and then testing was carried out by inner circle of
founders. At that time there was no specific organizational and functional
structure.the stage of growth was marked by an official registration of the
company and informal links between the project participants. Communication
between investors, researchers and founders did not require a formalisation. At
the late growth stage, there appeared a sign of functionality of business
tasks: Marketing and IT departments. Departments formed a flat hierarchy,
providing management with flexibility. When workers were hired to the company
there were established formal relationships. In the next step - maturity, the
company acquired an organizational structure.Company has a functional
organizational structure as the structuring is made according to functions: the
IT development and marketing. The functional structure includes clear, precise
subordination. Founders of the company are fully controlling all departments
and processes of the company. The company at this stage has functional
organizational structure because it produces the same type of products - mobile
applications, and in 2015 only one product- project HeadyUp.( see Figure 1.24)
Figure 1.24- Organisational structure of HeadyUp
’s common for IT projects in the first stage of funding to find the first
capital through connections of friends and relatives. The creator of the idea
took the same path. Being IOS back engineer, he asked his friend to become
cofounder for certain amount of money and percentage. The role of the founder
was to program and implement the base of the application- 50% of the design.
The cofounder was first investor, who was responsible for marketing activities
in the future.the second stage of funding founders of the company found the
investor. There is an event that is called “Startup conference” that is
happening every year in the ETH University, where young IT entrepreneurs find
investors and workers for their startups. The CEO of the company was searching
for IT people for his team in this event and at the same time found the
investor for the startup. The investor was impressed not only by the idea but
also by the young entrepreneur capabilities, who spoke 5 languages and knew 6
coding languages. The first investor invested 6 digit numbers and the business
evaluation came to 10 million francs. Now the company is on the 3d stage of
funding. It is searching for private investors or Venture Funds that are ready
to invest in the startup. Below is presented the calculation of the percentage
the next investor receives if he or she invests $100 000. ( see Table 1.3)
1.3- Calculation of the investor’s percentage (HeadyUp Management Team)
*Pre-money valuation = $10
000 000 *VC investment= $100 000
|
Post-money valuation= $10
000 000+$100 000= $10 100 000 The VC investor %= $100 000/$10 100
000=0,0099=0,1%
|
After having found more investors company wants to grow and expand the
customer bases. Later if it becomes successful founders with the board of
investors plan to sell to one of the IT giants or if the company generates
revenue to go for the IPO.company signed contracts with the major retailers in
Switzerland such as Migros, Coop and Denner concerning location-based
advertisement in the application in the future. The concept of location-based
advertising is that the application saves the information about the location of
the user while he or she uses it, HeadyUp processes this information and when
the visitor is located near the point of sale, sends location-based advertising
- for example, special offers of the partner company, which user visits.
Company partners make budget and pay CPM-cost per 1000 impressions. The company
plans to make partnerships with fashion boutiques, cafes, restaurants and
famous hotels in Switzerland and Europe, and later in Russia. The process of
selling advertising space in the application consists of several steps:
The Company makes a contract with a partner that every time the
user is viewing the application in 30 meters from the advertised business, the
user receives a bonus or special offer, if a mobile application is in the online
mode.
The partner company provides HeadyUp with advertising content
for publishing in the application
HeadyUp advertises the partner company in the application every
time when users are in the 30 meters area from the partner’s place or event
The partner company pays the fix price for the 1000 views
1.25-The process of selling advertising space in the
application
the SWOT-analysis of business process of selling advertising space and
time in the application Heady Up, strengths of the business process is that
location-based advertising - is a new marketing tool that will not create a
negative, irritating effect on the visitor, because it is adapted in time and
place. Secondly, mobile application HeadyUp is a habit forming product. Its
purpose - to form a habit to switch on application every time a person goes out
and wants to know what is happening in the world or around himself or herself
in the place which he or she cannot see in reality. Having formed the habit, the
company receives the loyalty of users. At the same time, users are interested
in using the application, receiving reward, bonuses in the form of accumulation
of points, discounts or gifts from partner companies for their work- publishing
some media content and visiting different places.1.4- SWOT Analysis of selling
advertising place in the application
Strengths
|
Weaknesses
|
Geo-targeting advertisement
Users receive rewards in the form of discounts in partner companies New way
of advertising cheaper than traditional
|
Users only with Apple
smartphone can download the application Not well-organized process of the
selling process ( partner companies can’t upload ads in the website, they
need to send to moderator of the application If the phone is switched off
user can’t receive notifications Negative reputation about location based
applications
|
Opportunities
|
Strengths
|
If the application will be
popular around the World, the scope of partner companies customers’
increases- the product advertised globally. Company builds a positive
reputation without using aggressive methods of advertising.
|
Negative reputation can
decrease number of users. If the number of users decreases because of
negative reputation- application can’t earn money with advertisement.
|
regard to the weaknesses of a business process, only those users who have
Apple smartphone may be involved in the game of earning rewards. The company
has not yet come to the idea on how you can automate the download of
advertising content in the application website so now developers are actively
working to resolve this issue. Currently they have already established the
algorithm that exhibits advertising at the time when the user is 30 meters from
the point of sale, but there is no feature that gives an opportunity to
download the advertising by the partner online. If the phone is switched off,
it does not receive notifications about discounts and promotions of partner
company. Additionally, some bloggers formed the negative reputation about
location-based applications, admitting that they violate privacy concerns of
people and see their location.of business sales process of advertising space
and time is about the fact that if the application will be popular around the
world, anyone with the application will be able to view information about the
company and being in the point of sale, will receive special bonuses. Also,
with the expansion to new markets the company will have bigger profit. In
addition, as the number of users in the company increases - the partners
automatically increase the number and the company builds a positive reputation
without using aggressive methods of advertising. The more loyal users the
application has the more loyal customers the application brings to the partner
company.threats, companies do not want to enter into the partnership due to the
low efficiency of the instrument. Also the reason for decrease of the number of
users may be that the privacy rights of people are violated, because the
company is aware of their location. Another threat includes the possibility
that people won’t like the application and the number of users decreases.number
of users of the company HeadyUp grows every day around the World. To the end of
the 2015 year company plans to have 1 000 000 users.to the data from the
similar application that is made in US, the average amount of views of one user
per month is 1200 views. Based on user-driven mobile applications market
average, the CPM is from $1,48 to $1,78 and there are 14400 views per user per
year. The Average pre-revenue for the 2 first years when the business grows
rapidly is 57 million received from investors. The advertising revenue comes to
zero in the first years, that is why there are many IT startup companies don’t
make revenue first years and have losses. The second or third years company
starts to make advertising revenue which is calculated from the formula of CPM.
1.4- The formula for calculation of advertising revenue [17]
Advertising revenue= number
of users*number of views/1000*eCPM
|
revenue minus expenses is Net Income . The net income of successful
startups grows every year. At the same time the price for the IT product also
grows up. Other IT giants or investors can buy the project on the price of
Project Valuation. Company HeadyUp doesn’t give an access to financial
statements or cash flow, so that it’s possible only to predict but not to
calculate with real figures financial revenue in the research. Company plans to
attract users from other platforms such as Vine, Instagram, Twitter to increase
traffic in the application. ( see Figure 1.26)introduce IT company to the World
the website of the company was created and the link how to download the
application was adapted in the website. The website included the description of
the application, pictures and ways how people use it. Additionally, after
launching the application, marketing assistant managed the blog where she
posted some popular pictures users uploaded in the application. The site was
easy to navigate, with the simple web address the same as company name. Also
there is contact information, fresh interesting content with friendly design
and style.of the tools that were used to analyse the product performance and
perception is Marketing Mix 7P. It consists of 7Ps: product, price, place,
promotion, people, physical evidence and process. 7P is very important to make
when the company introduces the new product to the market. In case of the
company HeadyUp the new product is the mobile application.application is a
location-based photo/video-sharing platform that focuses on allowing users to
share photos and videos of what’s happening around them with those
geographically connected to them. The quality of the product is very high,
there are not much bugs and the application doesn’t crash. Concerning the
usability- an average consumer can use the application and face no difficulties
because the design and interface are familiar and made like in other social
networks, where user has a profile with pictures, comments, likes, a newsfeed etc.
From the prospective of habit-forming products, it’s advised that the default
screen of the app is changes to the camera option, so that the user understands
that the main activity is to take a picture or video and share with the whole
World. As about versions of iOS, the product is built for the latest iOS
version, which makes it not possible to download for users who didn’t refresh
the system. Additionally, the application is optimized only for holders of
Iphone 5, Iphone 6 and Iphone 6+, which narrows the scope of users. Company
should think how to adapt the app for earlier versions of the iOS and build the
app for holders of Iphone 4 and Iphone 4S. Design is simple and minimal and how
it was found in the qualitative research people are satisfied with it.
Geo-targeting technology is incorporated in the product that makes it as an
interesting marketing tool for partner companies. Also the company wants that
users make the word-of-mouth advertising, so that more people would be willing
to tell friends and family about the new application. The trigger for the
action to download and open the app are curiosity and boredom, so that the
company should take into account what kind of notifications to incorporate for
engagement of usersprice for the application is free in order to secure users
that they don’t have any risks to download the application. But the company in
the future wants to make revenue with location-based advertisements that users
are going to see on their screens. The price that companies are going to pay
will be for 1000 views of the advertisement calculated with eCPM formula. CPM
component should be adapted by location where the advertisement is viewed,
number of users and number of views per one user. Then the special algorithm
should be made to calculate the price according to currents indexes.product is
sold in the Appstore that is only on Apple devices. According to the survey
made for this research paper Word-of-mouth and Appstore trends are the most
often used sources, from where users get to know about applications.Appstore
trends, there are 9 reviews of the app in the preview page which estimate the
app with the 4+ rating in the market. From the survey it was found that people
download application that has at least 3+ rating. The application is not in top
ratings yet, but it’s possible to find it by the name. It was identified that
if the application is free of charge and with interesting idea users download
it. Then they pay attention to the description, which should be translated to
the language of the Appstore and with good pictures. Analysing HeadyUp Appstore
preview, it can be concluded that it’s free, with description only in English
and neutral pictures. Company should adapt the language in which description is
written to the language of users, and find pictures that influence users to
download the application.the promotion of the application there are used
different marketing and PR tools. At the beginning company started to promote
itself with such PR tool: the Swiss and Russian press were contacted for
writing the article about the founder and the company for free. Then expert
opinion blogs joined to promote the application. Company has a budget to spend
on marketing. HeadyUp wants to pay to some technological websites to appear in their
pages such as Techcrunch, Mashable etc. Also it’s creating the Application
video for posting it in YouTube. After making some partnerships with companies
that want to be advertised in the application HeadyUp appears in their printed
material magazines in points of purchase and in their websites. According to
the research next the most influential and often used sources are online
articles and social networks. HeadyUp is present in some online media, but it
needs to take more effort to be present in English, Russian and US online
media. The company has its company pages in Twitter, Facebook, Vkontakte that
don’t have daily update of posts- HeadyUp should make the SMO marketing plan
that will show what should be done to attract new users. Additionally, company
should put the budget and spend on Facebook ads for the targeted
advertising.Evidenceapplication is for free so that B2C customers don’t lose
value while downloading the application. But as for B2B customers the quality
of the product should reflect the price for the advertisement and
innovativeness of the product. The eCPM should be adapted to the county where
advertisement is sold, to the number of users and number of views per one user.
The application should be tested by outside company and test research made to
improve the quality of the application. Concerning appearance, users like the
logo of the app and colours, the one thing to change is the small size of the
icon. Design is simple and minimal and how it was found in the qualitative
research people are satisfied with it.it was found out from the single case
study company background, there are 4 programmers which are all specialist for
creating IOs application. Company should recruit people who will be developing
Android version of HeadyUp, because of the reason that half of respondents that
complete the survey have devices that operate in the Android platform. The
people component can be described also in a way that the application is the
replacement of people who distribute fliers nearby points of purchase. HeadyUp
can replace this job in the market. Only people who want to have special offers
-receive them. Additionally, company should employ marketing specialist or
outsource marketing activities to specializing in mobile application promotion PR
and marketing agency.about interactions between the user and the company there
is a company website with contact details, Appstore reviews and other social
networks’ company pages and groups. The company wants that the user will form
the habit of using the application every time he or she goes out or discover
new places. Results of the survey shows that social network that enables to
communicate with friends, spend free time and get news -the product that people
want. HeadyUp provide people with World news but it should implement the
feature to communicate with other users. It was identified that people were not
exited with the idea but everybody agreed that they are going to use it if only
there would be more users. Another thing was found is that people compare
HeadyUp with othr location-based applications and don’t see differences and
don’t understand the idea, so that marketers should find the strategy on how to
communicate the uniqueness of the idea. Concerning B2B customers- partner
companies - the process of uploading the advertisement material and calculation
of the price per 100 views should be optimized by implementing special feature
in the website of HeadyUp.in influential Swiss magazines can push the traffic
to the application. People get to know the success story about the company and
the main information about the application and download the product. To measure
how many users company received after press-related PR activities there were
made calculations.
1.27-The business process of publishing of the article about
HeadyUp in Swiss press
identify whether the articles in influential magazines bring new users to
the application and consequently revenue, we need to calculate the number of
users in the application before and after the usage of PR tool and PR tool
expenditure.tool expenditure
1.5-PR activities’ expenses
Phone calls
|
10 CHF
|
Professional photo session
|
80 CHF
|
Professional photos of
people and mock-ups
|
10 CHF
|
Total:
|
100 CHF
|
1.6- Number of users before and after publishing of articles
|
30.03.2015
|
26.04.2015
|
Number of users before
publishing of 2 articles
|
100
|
|
Number of users after
publishing of 3 articles
|
|
985
|
-100=885 - Number of users attracted with the help of PR tool.
to the statistics about advertisement in startups, that use CPM
monetization method (Average fixed price for 1000 impressions) dated to 2013
year, the average fixed price for 1000 views is $1,43. In the popular
application every user views the advertisement 14 400 times a year, meaning
that he or she views the ad 1200 times a month. Not popular application has 300
views a month.
1.7-Calculation of the revenue received from accomplished PR activities
885 users*300
impressions=265 500 impressions
|
265 500
impressions\1000*$1,78 =$427,59 (403,57 CHF) a month
|
1.8-Calculation of the effectiveness of accomplished PR activities
Effectiveness =Revenue from
the accomplished PR events \expenditure on PR events Ef.=403, 57 CHF
\100CHF=4
|
the calculated results it can be concluded that publishing of articles in
Swiss press is economically effective tool for increasing the number of users
and consequently revenue of the startup.department of HeadyUp established the
Social Media plan. First of all, there was created the internet page where
potential users could have found information about the application. Secondly,
pages in influential online social networks such as Twitter, Facebook,
Vkontakte were created and promoted by marketing department. After that it was
advised for founders to change their pages of social networks in professional
way. The reason is that nowadays people treat and trust company by evaluating
the picture of the CEO in social networks and information he or she shares. The
next step was implemented to become close to customers. Founders of the company
made professional pages in Linkedin to talk with potential investors and users.
Other social network is one of the best tools to promote a small business.
Twitter gives the opportunity to become close friend with your customers and
value them. So that it was created the personal page of the CEO of the company
in Twitter where he twitted news about the company and retwitted interesting
content from users of the application. Additionally it was created the page of
the company that was promoted in different Twitter groups to gain new users.
Then the HeadyUp team measured which social media channels are the most
efficient and focused on developing these areas., after the first investment
company had a capital and it was possible to invest it in marketing. To choose
the best strategy for advertising the product the marketing research was
conducted. Marketing assistant created the survey and distributed among
Universities and posted online in different social networks. During this
research the collected data is analysed and conclusions on which marketing
channels to use were implemented. The information on the best marketing channel
is presented in the conclusions part of the research.SWOT analysis influenced
by critical thinking can show the overall situation of mobile applications
market and can help in making strategies for entering this market. Also, it is
really useful tool for analyzing current performance of the company and if
needed for finding ways how to improve it.from the prospective of strengths of
HeadyUp this company can be described as a pioneer in the online applications
market. HeadyUp has a patent on the code of the application and brand name,
which already well-known in Switzerland because of big presence in local
newspapers. Furthermore, HeadyUp has one of the best programmers who were
involved in creation of PayPal before, that created the application, the
resource base is unique and with big experience. The company which is working together
with HeadyUp and providing server is well-known around the world and bring
connections to advertise and fund the start-up. The idea of the product is
unique and there are not much analogues to existing application. The new
geo-targeting technology is implemented making the application progressive
application in the market. From the marketing perspective, the product is
developed in the European market, in comparison to majority created in US that
makes it attractive for European users and European investors. The product is
global meaning that every person who has the smartphone can use the application
which expands the scope of customers and at the same time the advertising
opportunities for corporate clients. Users of HeadyUp are already in most countries
in EU, North America and Russia. The real time news idea is the way on how
people can get the independent information from first hands. This can change
the way how people receive information and change the picture of nowadays media
channels.weaknesses of the application the product wasn’t tested by many users
and there was no marketing research that identifies the drawbacks of the
product. There are some bugs in the performance of the product that
applicationeared because of lack of testing. Also Apple didn’t applicationrove
the video feature due to privacy issues. Application works only on Apple
devices that make the scope of the market narrow. The product doesn’t have
clear monetization strategy or financial model. The marketing plan is needed to
be improved.about opportunities HeadyUp can develop the Android version that
will help to gain more users and expand customers’ bases on other mobile
devices. If the customer bases expand to global level, big IT giants like
Facebook or Google will be interested to buy the company. Additionally, the
application code is protected by the law so other companies can’t make the copy
of the product. Geo-targeting technology can change the way of marketing
research in many companies. For example, with the application corporations can
track how many people came to the point of purchase, where did they spend the
most of their time, how many times there were in particular place etc. With
offered monetization strategy the application can earn money all around the
World, but it’s difficult to implement it.on the unique idea of independent
news it can be a revolutionary application that will change perception of
traditional media channels. Companies can use HeadyUp as a new advertising tool
based on the location of the customer.analysis shows that privacy issues can be
a negative sign that makes people stop using the application. It’s not allowed
to film people without their permission by law in many countries. The current
research can find out features that users don’t like that will result in higher
costs for developing of the application. Privacy issue can make newspapers to
post negative information about the company, spoiling the brand image of the
company. If financial model doesn’t work, the company won’t generate the revenue
from advertisement.in all, the climate of developing the start-up with such
unique idea is positive. There are more opportunities than threats and
strengths than weaknesses. The research on the company is essential, because it
will help to identify the wants and wishes of currents users that lead to
improvement and better adaption of the product to the user.of all, to find
prospective workers and investors HeadyUp was present in many University
events. In one of the events which was called StartUp Conference in ETH HeadyUp
founder found first private investor. The next step was to contact all printed
and online media in Switzerland to advertise the company across the country and
attract new investors and users. Articles about the company and CEO were published
in almost all influential printed media in Switzerland, France, Germany,
Austria and Russia such as Walliser Bote, 20 Minuten, Blick am Abend,
Startup.ch, Heute.de, Metro.ru, etc. Additionally, influential tech bloggers
made posts about the new application to evolve the popularity of the product.
Then venture companies around the World were contacted. Now the company
negotiates deals with private investors that found HeadyUp through media
presence and Venture Funds.third stage of networking process in company HeadyUp
is that representatives of the startup attend different networking events in
the role of speakers. One of the events that CEO is going to participate is
called Web Summit 2015 that takes place in Dublin, Ireland.of the most frequent
questions that small companies try to find answers on is how to attract
customers. To solve this problem in HeadyUp management team followed the plan
on how to gain users online and offline that was built with the help of
different sources.of all, the team made the descriptive content that gave a
feeling for prospective users that they would download the application,
appropriate pictures and mock-ups were ordered from professional web designer.
The message that the advertising had was focused on target customers. Examples
of post in Facebook, that HeadyUp created is in the attachment 4., referrals
were also important in building users network. The aim of the startup is not
just gain users but also to make them use the application all the time.
Referrals in HeadyUp case were users who liked the application. They were asked
to share the information about the company in their social environments., the
company seeks for other companies who have the same target audience, so that
they can share their customers’ database in exchange of benefit they receive
from HeadyUp. The last point of the plan -strategic alliances was not
implemented, because company is not that big and doesn’t have a profit yet that
it can collaborate with big companies.the conducted quantitative research we
identified what company should change to attract new users in Russian market
and engage current users. First of all, the application in the Russian Appstore
should be optimized in the way that the description, reviews, the text on
pictures should be translated to Russian language, because people think that if
the information of the application presented in English, the user experience
also will be in English. It was found out that HeadyUp has standard, not
attention-grabbing pictures in the Application preview so that the company
should find such pictures that trigger users to download the application. One
of the most important factors of download is that the application will be free
of charge, so the user doesn’t have a risk to spend money on the application
that he or she doesn’t like. As for the design and logo respondents were
satisfied with offered solutions, just some of them marked that the white
symbol of the logo should be bigger to see it more clearly. Focus group
respondents were neither excited nor negative about the idea of the
application. They mentioned that there are many location-based applications in
the Appstore. From this finding HeadyUp can make the conclusion that they need
to change the direction of the application. For example, to make it similar to
dating platform but at the same time people can have a possibility to get to
know about World news.the functionality it was found that in Russia many users
with IOs devices didn’t refresh the system of the device to the new version so
that many new applications they can’t download in their system. Developers
should think about finding the solution to this problem. Having changed the
direction of the application, features such as chat, private profiles and
follow requests should be implemented in the application. The chat option is a
big disadvantage of the application. To attract users there should be also
carried out different marketing activities. It was found in focus group
research that friends’ advices, Appstore trends and other social networks are
biggest influencers and sources of the information about new applications for
Russian users. The results of the quantitative survey are presented in the
scheme below.order to determine whether resources and capabilities of the
company are its weakness or strengths in existing environment of threats and
opportunities it was made VRIO-analysis. Company HeadyUp was assessed by 4
criteria: value, rarity, difficulty to imitate and support by organization.
(See Figure E1). These 4 criteria are the most important for the formation of
competitive advantages of the company HeadyUp. Through the analysis we have
identified that HeadyUp has temporary competitive advantage.:HeadyUp benefits
its users because it provides them with honest news in the form of photos and
videos from around the world and helps to establish contacts with people around
the world. The application helps companies to deliver advertising to the future
customers, which is adapted by place and time. From the companies’ point of view,
location-based advertising increases the flow of visitors and respectively,
sales of partner companies. Another valuable advantage is the ability of
companies to know the statistics of visits to specific point of sale: the date,
time, duration, frequency of visits of the customer, which is very important
for the study of conditions the client will most likely buy a product or
service, as well as to predict the number of visitors during the day.:idea of a
startup is unique because there are no more applications that can link one
person to another on the map, not being a dating platform. Many features can be
compared with features in the application Instagram, but it’s not based on the
location and it is not possible to see what is happening in the world on live
map with pictures. In the future, in the application- partners can place
location-based advertising, which is also a unique idea that has not yet been
used in the world. So far, targeted advertising on the Internet is used in
corporations such as Facebook and Google and Vkontakte, but there is no company
that would be using targeted and location-based advertising in the real world,
which is based on the application. Also ads that will appear in the application
will not irritate the users as they are adapted in time and place. As a
consequence, users for the frequent use of the application will be awarded with
points that they can exchange into discounts or gifts at points of
sale.developers of the company HeadyUp are rare and with high qualifications because
they have from 5 to 10 years of experience each which is an advantage over
other companies.
1.28-VRIO-Framework. [21]
to imitate:application code is protected by patent law in Europe and
America, which is a proof that it’s impossible to create the same product. But
the idea of location-based advertising may be reproduced in any other application
where the option of positioning is in place. It can be concluded that the
application is partially possible to imitate because some functions can be
copied. Patent law related to social networks and applications poorly regulated
in many countries. Slightly changing the idea, new companies can create an
application-substitute, provided that the company does not become so popular as
Instagram or Facebook in the short term. The market for mobile applications -
highly competitive area, substitutes of HeadyUp appear every day, so the human
factor in the choice of a product is fundamental.:regard to the criterion of
organization of the company, it can be concluded that the company has not
enough employees who are responsible for marketing of the project HeadyUp.
Companies should hire a third-party marketing agency, which is known for its
success in the promotion of mobile applications. If the company develops and
gains more users, there should be organized sales department or made a special
user-friendly functionality in the company website, for example the same as in
Google AdWords, which will load the companies’ partners ad content for further
publication in the application. The company also has to organize its internal
policies and regulations, organizational structure and culture for more
coordinated work and for getting positive results.
CONCLUSION
HeadyUp passed already 2 steps of launching plan: pre-launch and launch.
Now the application is on the after-launch phase. During the first pre-launch
stage company made a marketing research, has built an application, tested it
and prepared for introduction in the Appstore. Also the logo, slogan, design
and the name of the product were created with the help of market and keyword
researches. Monetization strategy was created in the continuous brainstorm that
took place in the office every working week. Groups and pages in Facebook,
Twitter, Vkontakte, Instagram were also created in the pre-launch time. Most
influential press in Switzerland, Russia and Europe was contacted and press
releases sent for the future publishing when the application was online. Moreover,
the application was translated in English, Russian, German, French, Finnish and
Portuguese.period was dedicated to marketing activities. After the company sent
press releases, the Swiss press published articles in popular magazines and
journals and in online versions of these media. Then the activity in social
networks was established and daily posts were launched by marketing department,
afterwards the blog about the application was created to increase number of
users which is vital purpose of all these PR and marketing activities on this
phase. To create product awareness the preview of the application in the
Appstore was optimized for Swiss market. Summing up, launch phase of HeadyUp
was not implemented with the full power the company could have used. First of
all, there were not made creative social media campaigns, Appstore
optimization, Mobile Ad campaign, Outreach of PR Database 1, 4 Million etc.
Company should have made more effort for marketing the new product.
Consequently, the rise of number of users was not that significant.company
HeadyUp is on the after-launch stage, which is the time of analysis of past
activities, change and optimization of them. For this purpose company decided
to carry out the marketing research with the help of intern from another
country. This paper helps company to analyse what’s going on with the
application and what company should make to gain more users. The detail plan of
steps in the after-launch period was established through deep analysis and
research. Based on 4P Marketing mix and quantitative and qualitative researches
it was made the scheme which is describing what should be change and optimized.
In addition, it was created Social media plan that company should follow to
make better online presence.
VRIO-analysis it was identified that company has temporary competitive
advantage, meaning that company resources have values and rarity but it’s
possible to imitate them. In spite of the fact that company code is patented,
other application development companies can take an idea and implement it in
different interface and design or built in some features of HeadyUp existing
product, creating product-substitute. Summing up the received finding, it can
be concluded that HeadyUp should work faster and should develop their creative
marketing campaigns on attracting and retaining users.analysis helped to
analyse internal risks and opportunities that company can face in current
conditions. According to SWOT- analysis there are a lot of strengths that
company has such as innovative habit-forming product, geo-targeting technology,
actual trend- social networking etc. The strengths of the company help to build
opportunities- the advantage of the company is that it doesn’t have physical
boarders so that the product can faster become global and increase user
database. B2B customers of the company -other companies who want to advertise
can benefit from the application by advertising their product globally. As for
the internal risks or weaknesses- the biggest risk is has is reputation of
location-based applications that monitor the location of every user. But
according to quantitative research it was found out that privacy issues is not
the biggest reason why users delete the application. Threats are that press
starts to make negative PR about monitoring of the location-based applications
at the same time makes them not interesting for potential users.the
quantitative research it was identified that the best ways to advertise the
product are Application Online magazines and journals and other social media
platforms, then less effective are video ads and e-mails.the Financial bubbles
part of the analysis, the price for different types of applications change up
and down depending on which phase of the financial bubble the application is.
The highest prices for popular applications are before the burst of the bubble.
Now there is the trend that big IT companies buy small IT start-ups with big
prices to compete with other giants. When the bubble bursts only these giant
companies can predict, because they are creating the financial bubble. Now the
time that can be described as peak of financial pyramid or the time before the
burst of IT bubble, meaning that it’s advised in financial profit purposes to
sell the startup to the giant company in 2-3 years, when the prices are at the
highest rate.
1.30-Social Media Plan for HeadyU
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ATTACHMENTS
1 Focus group
research questions
question of focus group research
What kind of applications
do you download most of the time? Can you describe in 2 -3 words?
|
Ilia:
|
Famous and which have a lot
of users.
|
Denis:
|
Famous and new in the
application market.
|
Karen:
|
I download famous in my
community applications.
|
Dima:
|
Popular, which have a lot
of users.
|
Oleg:
|
The same as Denis.
|
Dmitri:
|
Me? I download popular aps.
|
question of focus group research
What does influence you to
download the application? Where do you get to know about new applications?
|
Ilia:
|
I get to know from my
friends. Most of the time my best friend says about newcomers in the
application market. Most of the times it goes like this: I have a need in
something, for example to chat for free and not to pay for sms, so than I
check free application for chatting according to ratings and reviews.
|
Denis:
|
There is exists the feature
in the application - how many people downloaded the application. I choose by
these criteria.
|
From the social
environment, for example from online social networks, from friends also.
There are some people who are instantly sitting, checking out applications,
like my friend Dima.
|
Dima:
|
I check application trends.
But I think most of the time people get to know about new applications
through friends.
|
Oleg:
|
I ask Dima to tell me about
new applications.
|
Dmitri:
|
I choose by reviews, rating
and then say my friends to download.
|
Third question of focus group research
What brand image do you
have concerning Swiss IT companies? Do you pay attention to where the application
was produced?
|
Ilia:
|
I don’t know any
application that was created in Switzerland.
|
Denis:
|
Well, I never check the
producer of the application.
|
Karen:
|
Most of the time I download
American applications. But it doesn’t matter where it was produced.
|
Dima:
|
-
|
Oleg:
|
I download Russian or
American.
|
Dmitri:
|
Most applications are
created in US in Silicon Valley, so I think most of my applications are
American.
|
question of the focus group research
What is the most important
in the application that makes you to download the application?
|
Ilia:
|
Functionality. In other
words the application should be made simple. For example, to take the picture
you need to click 6 times- it is irrational application. The next is the
number of stars the application has. If less than 3 stars I don’t download.
Then I read reviews. If there are first 2-3 reviews are good -I download.
|
Denis:
|
The application should be
free.
|
Karen:
|
Only if it’s free I
download and then I watch the functionality.
|
Dima:
|
It’s really important that
the application is free and simple.
|
Oleg:
|
In Russia the application
should be free- otherwise nobody downloads. But by the way I paid for
whatsapp , because all my friends used it.
|
Dmitri:
|
The application for 1,5 $
is very expensive. Actually, I never paid for the application. I think the most
important are reviews and description.
|
fifth question of the focus group research
What do you think about
geo-location based applications?
|
Ilia:
|
They are already long time
ago invented. I don’t think they will be popular.
|
Denis:
|
For me it’s ok to share my
location, I just don’t have time for this.
|
Karen:
|
The time for location-based
applications is gone
|
Dima:
|
As I know , for example
Foursquare young people stopped using. It was trend for 1-2 years.
|
Oleg:
|
I don’t use Swarm or
Foursquare just because I’m too lazy to click the button of checkin in
special place. It’s not interesting to make a checkin anymore.
|
Dmitri:
|
Well, now instead of
Foursquare there is the application Swarm, but I don’t see my friends who use
it.
|
2. Testing of the application
sixth question of the focus group research
You have tested the
application; Could you tell us what do you feel about it? Do you like
pictures of the application in the Application?
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Ilia:
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It’s better to translate in
Russian.
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Denis:
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-
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Karen:
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In the application on
pictures the signs are in English. So that if the person from Russia wants to
download the application, there appear misunderstanding. He or she probably
thinks that it’s in English and interface is also in English. And this person
decides not to download the application.
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Dima:
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There are cool, beautiful
pictures. The description in English is a big disadvantage.
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Oleg:
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People are neither positive
nor negative. Pictures are standard, neutral. I don’t feel anything negative.
I would read the description of the application after.
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Dmitri:
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Pictures are normal,
nothing special.
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seventh question of the focus group research
Do you like the logo of the
application? (Colour, form, size)
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Ilia:
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It looks like Google maps a
bit.
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Denis:
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HeadyUp? I think the white
icon should be a bit bigger.
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I like the point in the
logo like in Google maps.
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Dima:
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Really good logo. I like it
maybe the icon should be bigger. Colours are ok.
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Oleg:
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-
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Dmitri:
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It’s like all together -
Instagram, Google maps and Foursquare.
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The eighth question of the focus group research
What do you think about the
idea of the application?
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Ilia:
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The idea is a bit old, but
everything depends on users. If the company invests in marketing, gains
users- people start to use it.
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Denis:
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Word-of-mouth advertisement
will help to gain users.
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Karen:
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If there would be users- I
will probably download it
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Dima:
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If it will be popular and
in Russian- I will download it.
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Oleg:
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If you have free time- why
not to use application, meet, chat with some new people.
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Dmitri:
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-
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ninth question of the focus group research
What would you change or
develop in the application?
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Ilia:
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The company should make a
chat inside this social network. If it will be possible to chat I download
it. So there would be not only comments but also possibilities to chat with
the person you like.
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Denis:
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Maybe if she or he don’t
want to chat with you first you need to add his or her to friends, if she or
he accepts you then you can start chatting.
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Karen:
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For example, you see the
map and you click the area where you want to find people to chat around. Then
you choose some and start to chat with them if they don’t want they don’t
reply or block you.
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Dima:
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Depends which direction the
application follows. It will be cool if it would be like a dating platform.
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Oleg:
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Nothing. I like it, it’s
simple, but the user needs to have time to sit in it.
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Dmitri:
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I think for Russia it’s the
most actual if it would be like a dating application.
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tenth question of the focus group research
What do you think about
design or functionality of the application?
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Ilia:
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I like the design. It’s
made the same as most of social networks.
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Denis:
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-
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Karen:
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I like the design of the
application and functionality. But I, for example use my Iphone with IOs 7
system, the old version so that the application doesn’t work in the old
version.
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Dima:
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I like the design. It’s
really standard.
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Oleg:
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Design is simple.
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Attachment 2 The interview with CEO of
HeadyUp
How did you come up with
idea of the application?
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“I came up with the idea
when I was in one of the Swiss phone retailer’s shop. I took a picture on the
sample phone in the shop and next day I came again and saw some other
people’s photo and I got the idea. I realised that I can make an application
where I can see pictures depending on the place I go. Every place is a special
moment and you share this moment with other people”.
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It was difficult to find
investors?
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“No, when you are young
it’s much more easier to find investors, our first investor we met in the
event.There is an event that is called Startup speed dating that is happening
every year in the ETH University, where young IT entrepreneurs find investors
and workers for their startups. I was searching for IT people for my team in
this event and at the same time found the investor for the startup.”
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What qualities do you think
young entrepreneurs should have to start their own online business?
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“They should be crazy, have
courage to take risks and ability to build great teams.”
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Do you think it’s important
to have IT knowledge, the knowledge how to code?
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No. There is no big thing
behind it, if you can code it doesn’t mean that you would be the best and
make successful application, especially when u still did not finish the
University. “If u can code- it’s amazing, if you can’t -find people who can
do it for you. (Instagram, Twitter, Spotify, Airbnb -none of founders of
these companies had an IT knowledge)
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What will you advise to do
first when you already have an idea?
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“To stop everything that
distract you and focus on turning the idea into reality”
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What is the main reason why
you decided to start building startup?
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“I just like to build
things, I think it makes the World more interesting”
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Why the name of the company
is HeadyUp?
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“We came up with this name
just because it sounded great, nothing special behind it.”
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