Product Management Training

Product Growth Strategy of Facebook

In this case study, let us look at Facebook - the largest social network in the world.

The growth of Facebook as a product from inception to now has been nothing short of
remarkable. In this case study, we are going to look at facebook's growth across the product
lifecycle.

Every product goes through 4 stages in its life cycle - Introduction, Growth, Maturity and
Decline.

Introduction

When Facebook was first introduced into the market, it first focused on college graduates as
their target users. They adopted the strategy of ‘exclusivity’ by opening only to a few colleges
first. Other products to have followed a similar strategy are Gmail which was invited only at first.
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In their introduction phase, facebook had a limited number of signups and did not really have a
model for generating revenue. And when they came to the market, there weren’t really real
leaders in the market and ‘Social networks’ in general were only starting to pick up speed.
Competitors were Myspace (USA) and Orkut (India/Brazil). As we can see this fits really well in
the Product Life Cycle graph we see above.

Growth

And then, Facebook went into a period of hypergrowth - where people the worldover signed up
to Facebook.
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Who are Facebook's target users?

Facebook’s core target audience is millennial users, including male and female users. These
users are also the largest segment of internet and smartphone users. These users lead the
most digital lives and spend a large part of their day on the internet and social media channels.
Apart from that, they are also the largest segment of online shoppers.

They started introducing facebook ads and this became their primary source for revenue. With
increasing users, their ads sales also increased during the growth phase. Facebook displaced
other social networks like Myspace and Orkut in India and became the largest social network in
the world.

However, there were newer competitors like Instagram, Tiktok, Snapchat, LinkedIn and so on.

As we can see, this also fits nicely into the product life cycle graph above.

Maturity

With more than 1.9 billion monthly active users, Facebook has a strong user base. With more
people on facebook than ever before acquiring new users has not been difficult.

Facebook has also noted an uptick in mobile users and therefore a lot of investment has gone
into developing a great mobile experience for facebook.

Facebook can be considered as a mature product in a mature market which has not seen any
new major competitors since Tiktok.

Decline
Every product and every market eventually declines. Even for facebook the first signs of decline
are starting to show up.

Facebook’s total number of users has declined — a first for the social media platform that has
experienced seemingly never-ending growth since it debuted 17 years ago.
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Facebook lost about half a million global daily users in the fourth quarter of 2021 compared to
the previous quarter, according to the quarterly earnings report of Meta, its parent company.

The statistic shows how Meta has struggled to stay relevant to younger users, many of whom
are drawn to competing apps like TikTok.

That being said the daily active users of facebook has not seen a drop and is at 1.93 billion total
daily active users. So we can certainly not say facebook is in decline.

This is when product teams will look to innovate or pivot into newer markets or business areas
to keep the growth active. Facebook's big bet on metaverse seems to be in line with this and
only time will tell if Facebook will enter the decline phase of the Product Lifecycle or manage to
continue its growth for longer time periods.