Tuesday, February 23, 2010

The Tipping Point- How Little Things Can Make A Big Difference

(Book Review - For My Marketing Course)

Introduction:
‘The Tipping Point’ by Malcolm Gladwell was first published in the year 2000. ‘The Tipping Point’ is a biography of an idea. Tipping point is a moment of the critical mass, the threshold and the boiling point. Surpassing this threshold point creates vast changes. Gladwell explains this moment shift with the examples of tremendous increase in sales of Hush Puppies shoes in 1994-1995, sudden fall of crime rate after 1990 in New York City and spreading of HIV virus.

The Three Rules of Epidemics:
Gladwell uses all of these examples to illustrate what he defines as the three principles of social epidemics: the law of the few, the stickiness factor, and the power of context. The Hush puppies is an example of the law of the few where one of the exceptional people with a large social connection found about this trend and spread the message across. He uses ‘Winston tip cigarettes’ to explain the stickiness factor, a message that you can’t get it off your head. And finally a crime scene to explain power of context that shows people are sensitive to their environment.

The Law of the Few:
The ‘Law of the Few’ has many commonalities with the 80/20 principle. 80/20 signifies that 80% of the influence is created by 20% of the people. If we look at the pyramid of influence the law of the few is about the trend-setters and early adopters influencing a greater mass.
The first kind of people the author describes is called Connectors. Connectors have a huge social influence due to their larger social circles. Influence of these connectors is illustrated by citing Milgram’s experiments in small world problem. Milgram’s experiment shows that all the people in this world are separated by just six degrees of separation. In today’s context, Connectors play an important role in deciding the fate of social networking sites.
The second type of people is Mavens. Mavens are the early adopters. They have a huge knowledge of the Market place. These people are kind of opinion leaders for us in our day to day life. We take the advice of Mavens before any purchase. And final type is the ‘Salesman’, a person who can persuade you with his negotiation skills. Gladwell explains this with the example of Tom Gau who sells financial services and Peter Jennings.

The Stickiness Factor:
Stickiness Factor means creating a message that keeps playing in your mind. Gladwell explains the stickiness factor with the Sesame street example. Though, television was perceived as a low-involvement product for teaching; Sesame used their creative teaching methods and made television sticky for the children. Blue’s Clue is another quoted example in the book for the stickiness factor.
Stickiness factor plays a major role in direct marketing for the job is make the consumer to remember your advertisement out of the other hundred other advertisements. Gladwell cities Lester Wunderman who was successful in creating the stickiness factor in his direct marketing program through the use of ‘secret of Gold Box’ campaign.

The Power of Context (Part One):
Gladwell's third principal is the power of context, the notion that epidemics are sensitive to the context, or the time and place, in which they occur. Power of context is equally important as the other two principles as shown in the Goetz case. Goetz case shows the encounter of four young black youths with criminal records by an angry subway rider in 1984 when the crime rate was high. Today such incidents wouldn’t happen due to the change in context. To explain the power of context Gladwell points to something called the Broken Windows theory. If a window is broken and left unrepaired, people walking by will conclude that no one cares and no one is in charge.

The Power of Context (Part Two):
This chapter deals with the cognitive philosophy called channel capacity, which refers to the amount of space in our brain for certain kind of information. The most interesting limits in the channel capacity is the social channel capacity, the number of people with whom we can have a genuine social relationship. This number is pegged at 150 for the humans based on historical studies. ‘The rule of 150’ suggests that size is another contextual factor. The size of functional fighting units in army should be 150 or less beyond which people do not familiarize with each other. Does it still hold in the social networking world? We have to wait and watch.



Case Study – Rumours, Sneakers and Translation:
The case study is about the rise and fall of Airwalk shoes. Though, the brand initially targeted the skateboarding subculture of Southern California they wanted national brand name recognition. They hired an advertising agency and succeeded by understanding the variables that influence the public’s perception of coolness. Their avatars of coolness, such as Tibetan Buddhism, Pachuco gang culture positioned their shoes as cool footwear. But, when Airwalk cut their product line into single line of shoes and decreased their product breadth it lead to their decline.

Case-Study – Suicide, Smoking and the search for unsticky cigarette:
This case draws a relationship between the suicides among adolescent males in Micronesia and the teen cigarette smokers in the United States. Both trends were predicated upon two main factors. First, teenagers imitate others and try on new behaviours and attitudes during adolescence. Second, it is the Mavens who engage in early cigarette smoking or suicide and as they are like opinion leaders other emulate them.

Conclusion:
The author summarizes the preceding seven chapters. He believes that the difficulty and volatility of the Tipping world can also generate a large measure of hopefulness. By manipulating the size of groups, tinkering with presentations we can dramatically improve the receptivity and stickiness factor respectively. Gladwell concludes ‘With the slightest push in just the right place the world can be tipped’.

Monday, February 8, 2010

Social Networking Sites Analysis

(Co-authored with Pujitha Kalluri. This article is just a section of the paper presented at NIT Warangal Cura)

Through the ages, 1976 – 2009 social networking sites had seen many trends. The older versions like BBS, CompuServe are almost extinct and sites started in 2003-2004 like Facebook, Myspace are now the major networking sites. The user base too has seen a tremendous increase from a few thousand users to more than 1 Billion users today. Looking at the network traffic and reach of the websites will help us in identifying the changes in trends. The five major networking sites today are Facebook, MySpace, Habbo, Orkut and Qzone with each of them boasting more than 100 million active users. But Habbo and Qzone have no presence in India. Instead of Habbo and Qzone we can consider Twitter and LinkedIn who have a base of 50-75 million users and have a major presence in India. These five sites Facebook, Myspace, Orkut, Twitter and LinkedIn put together boast of 700 million user accounts. If we look at the trends of these five sites they have been vastly different. These trends can be observed using network traffic, daily reach and time on site.


Daily Reach:

Daily Reach means percent of Internet Users visiting that particular site. If we look at the 2008-2009 graphs for daily reach we see significant changes in just the two years. Facebook has shown the greatest increase from 8% reach in the beginning of 2008 to 30% reach in December 2009. Twitter on the other hand has grown from zilch to 5% daily reach. Orkut fell in the first few months of the year to almost 1% reach but then rose steadily to 2%. Myspace had a steady fall from 7% to 4% reach. LinkedIn saw a steady increase to 2% reach from less than 0.5% in the beginning of 2008.


Fig 2: Daily Reach (2008-2009)


Fig 3: Daily Reach (excluding Facebook)


Time spent on site:

The time spent on site is helpful in analysis the attractiveness of the social networking site. Facebook has seen an increase from 22 minutes in Jan 2008 to around 35 minutes in December 2009. Orkut has seen a drastic fall from 45 minutes to less than 5 minutes showing that the users are less interested in spending time on the site. Twitter, Myspace and LinkedIn are more or less stable without much change in time spent.


Fig 4: Time spent (2008-2009)



Network Traffic:

Network Traffic is the most important factor to consider a site’s success. Traffic can be generated by attracting more users to the website and keeping them engaged. Traffic Rank is calculated using the average of Daily Reach and Page-views of the site. Facebook has gone up the charts to Rank 2 only next to Google. It overtook YouTube and Yahoo in its journey. Orkut fell from 10th position to 60th position in Network Traffic. Twitter has seen the most significant increase among all the sites from 3000th rank to 14th rank. MySpace saw a fall in ranks though at a much lesser scale than orkut. LinkedIn rose from 200th rank to 50th rank.


Fig 5: Traffic Rank (2008-2009)




Analysis of Network Traffic:

Even though the data analysis is for just a two year period the change in trends is clear from the above parameters showing the transient nature of networking sites. While Facebook and Twitter had grown in network traffic, Orkut and MySpace fell. Orkut not only lost the reach but its existing users are also spending lesser time on the website compared to 2008. Myspace has lost reach but its existing users are spending the same time they had spent two years ago on the site. LinkedIn a site started in 2004 has grown steadily across the years the variations have been stable rather than spiked. But, the above analysis does not show why people have switched networking sites? What causes people to switch?


The internet says that micro-blogging has become a craze due to the increase in mobile phones. Twitter and Facebook provide a simple interface for micro-blogging when compared to other sites. Facebook also has many applications support services like Mafia wars, Farmville and so on that attracts many users. People also feel that Facebook provides more privacy and security features than orkut, orkut has controversies like ‘I hate India’ communities. Orkut has been banned in many countries like Iran and UAE. Orkut was also vulnerable to many virus attacks. Psychologists also feel that the name ‘Facebook’ has got a lot to do in attracting visitors.