SOE11112 Creating Business Excellence and Marketing Assignment Sample
Introduction
The marketing strategy of any organisation is the detrimental factor that determines its competitiveness. As a result of this, organisations develop their marketing strategy keeping several things in mind of which the macro-environmental changes form a major part. The following study is based on such macro-environmental changes that influence the marketing strategies of major organisations operating in the present generation. In this regard, the report would evaluate TikTok, which is currently one of the most popular social media platforms over the internet. The study would analyse the macro-environmental changes that have influenced the organisations global marketing strategy.
Company background
Figure 1: TikTok brand logo
(Source: TikTok, 202)
TikTok mobile application developed in China by ByteDance and was launched back in 2016. Since the launch of the application, it has grown quite popular in South Asia, East Asia, South East Asia, the United States, Russia, Turkey, and other parts of the world. The organisation has grown so rapidly that in 2020 the user base of the service crossed 2 billion mobile downloads (TikTok, 2021). The rapid growth of the organisation has been noticed by several companies and as of 2020 it has been ranked as the 3rd fastest growing brand right after peacock and Zoom
TikTok is a global social media platform that is video-focused much like YouTube, however, the platform is more known for short videos that are no longer than 1 minute (Guinaudeau et al. 2021).
Macro environmental analysis
As already stated above the marketing strategies of an organisation is dependent upon the macro-environmental factors that affect the organisation.
Political factors
Even after being one of the most competitive applications, TikTok faced resistance from several countries including India due to its ties with China. The organisation was accused by the Indian government of leaking the data of Indian users to the Chinese government. Following this incident, TikTok was permanently banned in India (Chakraborty et al. 2020). The organisation could not follow up with the regulations and information that the Indian government asked for, due to which TikTok along with several other Chinese applications was banned in India in 2020 (Miao et al. 2021). This step taken by the Indian government has been one of the major hits to the applications present in the global market because out of all the other countries TikTok was downloaded by 238 million users in India which are by far the highest followed by the USA with 83 million users as of 2020 (USA herald, 2020).
Followed by the ban of the application in India TikTok also received threats of being banned by the US government allegedly due to its ties with the Chinese government. However, the organisation has denied such ties and has been public in terms of claiming that they are ready to follow any government regulations regarding the security of data. Apart from India and the USA its organisation has also received warnings from countries such as Pakistan, Hong Kong, Indonesia, and Japan due to the issues linked with the data security of users (Axios, 2020). Due to such global political conditions, the organisation has adopted a highly transparent policy of being clear regarding the nature of data they collect from users. Such transparency has acted in the favour of the organisation’s marketing strategy and has helped them to continue operating in countries like the USA (USA herald, 2020).
Social factors
Social factors are another major and macro environmental factor that influenced the organisation positions, their marketing strategy, and the way it approaches their target users. After India, the largest Market for TikTok has been the USA and it has been rapidly growing in the country and at present, it has crossed 100 million users, which is equivalent to 37.36% of Americans (Backlinko, 2021). The growth of the company has been extending considering that in a matter of 20 months it has grown over 800%. Among the users of TikTok, Generation Z has the highest numbers with 47.4% belonging to the age group of 10 to 29 (Backlinko, 2021). Adding to that, the growth among American adults has also grown by 5.5 times in the last 18 months with male-female user ratio of 1:2 (Backlinko, 2021). The gender demographic of the application changed drastically in 2020 as more female users started to join the platform due to the ease of use as well as the features provided by any application demo targeted towards female users in the presence of beauty filters.
One of the major reasons due to which the application has grown astoundingly in the last year is a coronavirus pandemic. The covid-19 pandemic restricted people at their homes and because of which individuals around The World started looking for a source of entertainment. In this regard, TikTok emerged as one of the most popular sources of entertainment both for video creators as well as their viewers (Nazarov and Nazarov, 2021). One of the most convenient aspects of TikTok is the fact that it has short videos and uses continuous crawling from one video to another for several hours. This allowed the organisation to achieve one of the highest user engagement rates with an average session of 10.85 minutes that is twice more than that of interest, which is at rank 2 in terms of user engagement. Not only that, but the time spent by users on the app is more than 68 billion hours (Backlinko, 2021). This reflects that the application has been successful in terms of growing its user base around the world especially in the USA where American users as of March 2020 were found to spend more than 1.4 billion hours on the application.
Another social factor in the present context is the increasing number of social media influencers who are rampantly growing their own brands as well as promoting other brands with the help of the followers that have accumulated on their respective social media platforms (Guarda et al. 2021). The increasing number of social media influencers have also added to the growth of TikTok mostly due to the fact that it allows influencers to have a better engagement rate with their view as compared to platforms previously popular such as YouTube and Instagram. The strategy adopted by TikTok which was to focus more upon short videos that are near 10 to 30 seconds long was so successful that Instagram also took a similar step and launched a similar feature on their platform called Reels (INC, 2020). When organisations like Instagram follow the footsteps of companies like TikTok it becomes essential clear that the marketing strategy adopted by the organisation was quite successful (Peng, 2021).
Furthermore, a change in terms of consumer preference and internet uses also came to being after the covid-19 pandemic. This turned out to be a major opportunity for TikTok and the organisation group several folds during this time period. In a matter of 3 months the organisation was able to increase their number of users from 199 million to 315 billion globally and later crossed 2 billion mark (Sensor tower, 2020)
Considering the growth of the organisation, again during the covid-19 pandemic it can be clearly stated that the company’s business model and strategy was quite a fit for the conditions that arise during the pandemic. Considering the growth of their organisation and their reach, the main company started to include much more features in their apps and just like YouTube, the organisation now also pays the influencers for ad revenues. Initially the concept of ads or influencers earning money directly from TikTok was not present; however, the growth of influences flocking to TikTok from YouTube Instagram and other platforms influenced this move adopted by the company. This strategy was also adopted by TikTok in order to ensure that the number of influencers they have accumulated on the platform remains loyal.
Economic factors
In terms of economic factors, it can be stated that even when the world was under a financial crisis imposed due to the effects of covid-19 pandemic the organisation generated revenue during this period. The users spending on the application exponentially grew when it reached 2 billion users. The lifetime user spending on the platform has been estimated to be around $456.7 million, which is almost 2.5 times that of when it crossed 1.5 billion users with the revenue of $175 million (Sensor tower, 2020). In terms of users spending, the Chinese users have been identified to have 72.3% of the total spending that accumulates to $331 million followed by the users of the USA with $86 million and UK in the 3rd place with $9 million as revenue (Influencer marketing, 2021).
Marketing strategy
TikTok was generating record revenue during the period when the world was under a global financial crisis and the global GDP was also declining steadily. As a result of which the Theory of Impulse Buying Behaviour can be linked to this context. Majority of the users who have spent their money on TikTok was mostly due to the fact that they needed a source of entertainment and TikTok became a platform where spending money was more like an impulse (Mhalla et al. 2020). If the covid-19 pandemic had not hit the world leading to global lockdowns there might have been chances that the organisation would not have reached its present position nor would have accumulated such revenue from users spending.
As a result of this the marketing strategy that the organisation adopted can also be implicated with the help of Ansoff Matrix where the company simultaneously utilised Market Development and Product Diversification Strategy. This not only allowed the organisation to spread their existing app in new markets but also helped them in creating development and changes to the application to suit the ever-changing needs of users (Rach, 2021). The Product Diversification Strategy also influenced the company’s move to support influences by monetizing their videos with the help of ads. Even though influencers on TikTok are already earning with the help of promotions the addition of such options from at TikTok increased their engagement rate. Considering such opportunities influence has started to some strategies that would increase their number of followers and this on the other hand held TikTok to increase their overall user base (Guinaudeau et al. 2021). Therefore, by supporting a few individuals over the platform TikTok was able to grow a major proportion of their user base and this turned out to be one of the most effective marketing strategies adopted by the organisation.
Potential challenges and future opportunities
Some of the major challenges that await the organisation is the highly imitable business model that TikTok has adopted. Marketing strategy that has been adopted by TikTok has already been imitated by several new market entrance with one of the major competitors is doing Instagram. Instagram who is the help of reels is constantly growing to become much more competitive than TikTok (De Leyn et al. 2021). Furthermore, with the ability to integrate alleles directly from Instagram to Facebook the number of total users who have the potential to view a particular video has also increased significantly on Instagram. Such capabilities of Instagram have turned out to be a challenging aspect for TikTok, which remains at a risk of losing its current position in the market.
On the other hand, with intensive future opportunities the organisation can diversify their existing platform and attract more influencers by providing them attractive schemes, which can help them in generating revenue. Organisation can also collaborate with other major brands and producers to diversify the segments in which it operates (Ahlse et al. 2020).
Conclusion
The findings of the above study suggest the growth of TikTok in the last couple of years have been quite startling. The organisation’s marketing strategy has been quite effective it has not only helped them in reaching out to global users but has also given rise to the trend of short videos. Considering the fact that in major global organisations like Instagram and YouTube have also started adding features for short videos it can be concluded that the marketing strategy of TikTok has been quite successful in motivating these internet giants to follow a similar path in the global market.
References
Ahlse, J., Nilsson, F. and Sandström, N., 2020. It’s time to TikTok: Exploring Generation Z’s motivations to participate in# Challenges.
Axios, 2020. TikTok faces bans around the world. [Online]. Available at: <https://www.axios.com/tiktok-bans-worldwide-china-6e77a3a8-f4c7-4600-94bf-df89af0a8e5f.html/> [Accessed on 25 November 2021]
Backlinko, 2021. TikTok User Statistics (2021). [Online]. Available at: <https://backlinko.com/tiktok-users/> [Accessed on 25 November 2021]
Chakraborty, I., Kapoor, U. and Ilavarasan, P.V., 2020, December. There Is Nothing Real! A Study of Nonuse of TikTok in India. In International Working Conference on Transfer and Diffusion of IT (pp. 287-302). Springer, Cham.
De Leyn, T., De Wolf, R., Vanden Abeele, M. and De Marez, L., 2021. In-between child’s play and teenage pop culture: tweens, TikTok & privacy. Journal of Youth Studies, pp.1-18.
Guarda, T., Augusto, M.F., Victor, J.A., Mazón, L.M., Lopes, I. and Oliveira, P., 2021. The impact of tiktok on digital marketing. In Marketing and Smart Technologies (pp. 35-44). Springer, Singapore.
Guinaudeau, B., Vottax, F. and Munger, K., 2021. Fifteen Seconds of Fame: TikTok and the Supply Side of Social Video.
INC, 2020. Instagram Reels Copies TikTok, and Is an Example of Everything Wrong WithFacebookThe social network giant rolled out a new feature that reveals–again–that the company doesn’t get it. [Online]. Available at: <https://www.inc.com/jason-aten/instagram-reels-is-a-copy-of-tiktok-an-example-of-everything-wrong-with-facebook.html/> [Accessed on 25 November 2021]
Influencer marketing, 2021. TikTok Statistics – Revenue, Users & Engagement Stats (2021). [Online]. Available at: <https://influencermarketinghub.com/tiktok-stats/> [Accessed on 25 November 2021]
Mhalla, M., Yun, J. and Nasiri, A., 2020. Video-Sharing Apps Business Models: TikTok Case Study. International Journal of Innovation and Technology Management, 17(07), p.2050050.
Miao, W., Huang, D. and Huang, Y., 2021. More than business: The de-politicisation and re-politicisation of TikTok in the media discourses of China, America and India (2017–2020). Media International Australia, p.1329878X211013919.
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Nazarov, D. and Nazarov, A., 2021, September. A fuzzy model for assessing the content’s quality impact on the growth of users on the TikTok social network. In 2021 IEEE 23rd Conference on Business Informatics (CBI) (Vol. 2, pp. 192-196). IEEE.
Peng, Y., 2021, August. TikTok’s Business Model Innovation and Development-Porter’s Five Forces Model, Business Model Canvas and SWOT Analysis as Tools. In 1st International Symposium on Innovative Management and Economics (ISIME 2021) (pp. 482-489). Atlantis Press.
Rach, M., 2021, June. The Influence of Brands and Platform Mechanics on Creator’Content Sovereignty on TikTok. In Digital Marketing & eCommerce Conference (pp. 35-42). Springer, Cham.
Sensor tower, 2020. TikTok Crosses 2 Billion Downloads After Best Quarter For Any App Ever. [Online]. Available at: <https://sensortower.com/blog/tiktok-downloads-2-billion/> [Accessed on 25 November 2021]
TikTok, 2021. Our Mission. [Online]. Available at: <https://www.tiktok.com/about?lang=en/> [Accessed on 25 November 2021]
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