Chapter V Conclusion and Recommendation

CHAPTER V

CONCLUSION AND RECOMMENDATION

5.1 The marketing strategy of Tencent can be summarized as follows:

This study has analysis the features and strategies of divisional and products. The following table gives a brief summary of market position of these Tencent’s sections.

Table 5. 1 Brief summary of market position of Tencent’s section

Section Market development

QQ IM 789.2 million registered users

Weixin or Wechat 300 million users

Online game No.1 with a market share of 47.0%

Web game platform No.1 with a market share of 18.1%

Mobile game No.1 with a market share of 16.6%

Online advertising No.4 with a market share of 4.8%

E-commerce B2B No.4 with a market share of 3.3%

E-commerce B2C No.2 with a market share of 3%

Source: Company results, analysys, public information, CER

Base on Tencent’s successful IM platform; combined MAU of QQ and Wechat reached 1090 million at the end of 1Q 2013. In the area of online game, Tencent is also absolutely top No.1 in China. Such a large user base is a notable advantage for Tencent to extend the coverage of its products and services, by delivering customized message to target users,

complemented by experience sharing amongst the users. This is not only gives the company strength in a little weaker sections such as advertising, e-commerce, but also offers a solid support for the company to materialize new products and services. Tencent has a rather larger user base which provides a base to the company to collect customer database and analysis their Internet behaviors. Tencent use the large customer database offer user-oriented service and products to contact, transact and build customer relationships.

Tencent offers diversified products and services to meet various need and wants of Internet user (see Figure 5.2).

Figure 5. 1 Product Portfolio

Source: Company data

From the original IM communication software, Tencent QQ has become a comprehensive internet service supplier and its current service range concern with QQ game, QQ web portals, QQ search engine (SOSO), QQ music, Video, mobile IM (We chat), mobile game,

e-commerce(Paipai.com), Tenpsy and many other kinds of services that you want to get through Internet. Tencent exploit many directions to develop and extend its business. The company use this differentiation strategy is aim to build “one stop online service”. By diversifying the products and services portfolio, Tencent can bear a high degree of risk of failure investment and also can gain multiple source of income which are important for a company to develop.

By using Tencent’s large customer base, across its multiple platform, Tencent has strong ability to cross-sell its various products and services and up-sell its Value-add services. With the aid of psychology that likes to use free software, Tencent extend the market share continually. Besides provide original IM service, common additional services can used by use Tencent QQ, such as QQ email, QQ music and Q-zone. Tencent adopt another way to make profit, which is membership, and the fee is not very high – 10 RMB per month. QQ member can enjoy many special rights that general user can’t use, these services involve you can pick up the ID number by yourself, store data and information into QQ server and enjoy QQ value-added services without extra payment; all of these make you feel special than others, just like you own a diamond and that is a symbol. And this is the kind of low- cost strategy and special differentiation strategy.

5.2 Recommendation

Tencent’s strategic objective is to strengthen the market leading position and become the hub for fulfilling Internet users’ online life style needs. The development of Tencent had profoundly influenced the ways hundreds of millions of Internet users’ social communication and life style. There are several recommendations the researcher would like to discuss. Wish it could give some more ideas for Tencent to expand its market shares, diversifying its services and products and sustaining its growth and profitability.

Tencent need to enhance the overall competitiveness of its search engine and online advertising platform and are explore the synergies between SNS and search. E-commerce

is an opportunity for strategic expansion leveraging its substantial user base and deep knowledge of its users’ preferences and interests. As the users demand more mobility and real-time information, it’s a chance for Tencent to capture the emerging mobile Internet trend, continue to introduce a growing number of services and applications across a broader range of mobile devices, as well as customize and extend the existing services and products to various mobile devices.