Market Segmentation of Facebook Users

24 Pages Posted: 9 Aug 2013 Last revised: 9 Jul 2014

Date Written: August 8, 2013

Abstract

In this paper, I develop afresh a comprehensive approach to market segmentation of Facebook users. The approach considers the implications of Facebook’s multi-sided platform (MSP) based business model. Using cluster analysis of survey data, I develop a basic 3 segments solution for the online social networking (OSN) service - infrequent, frequent and engaged user segments. Then I extend the 3 segments solution to factor in responses of users to services of marketers and developers as well. The resulting comprehensive analytical framework for the MSP can help design market segments for all three parties/groups, i.e. Facebook, marketers, and developers.

As an outcome of this research, I offer a specific set of propositions addressing (a) the causal mechanism for response heterogeneity of Facebook users (b) interdependence of services (OSN, marketer’s fare and developer’s fare) on the Facebook MSP (c) basis for comprehensive market segmentation, and (d) the integral role of the low rate users in the network. Future research may validate these propositions further.

Keywords: Market Segmentation, Facebook, Multi-sided Platform (MSP), Cluster Analysis, Network Effects, Online Social Networking (OSN), Strategy, Marketers

JEL Classification: M30, M31, M37, M39, A10, A14

Suggested Citation

Dash, Raj, Market Segmentation of Facebook Users (August 8, 2013). IIM Bangalore Research Paper No. 438, Available at SSRN: https://ssrn.com/abstract=2307627 or http://dx.doi.org/10.2139/ssrn.2307627

Raj Dash (Contact Author)

IIM Bangalore ( email )

Bengaluru, Karnataka 560076
India

HOME PAGE: http://www.iimb.ernet.in

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