Why do most of the Facebook startups fail?

Whether we like it or not, Facebook in recent times has become an integral part of our daily life. Communication is not the only reason for using Facebook. Nowadays, it has become a vital platform for promoting businesses as well. 

Consequently, thousands of Facebook startups popped up over the last 10 years. These startups usually offer end-user products or services. However, not all of these startups become successful and most of these eventually go out of business.

There can be multiple reasons for not being successful in the long-run including factors such as quality and prices. Customers do not like poor quality, and charging too much can also make you lose customers. 

If you can provide a perfect combination of price and quality, then the customers will surely like the products or services. But, there is an underlying factor that affects the buying pattern of all consumers. According to marketing, that underlying factor is known as consumer perception. 

Usually, what happens is at first, most of the businesses give promotional offers or discounts. The motive behind this is to increase sales and make people aware. The promotional offers include buy one get one or a percentage discount offer. Seeing these lucrative offers, customers buy these products or services. As the customers can save a good amount of money, their perceived risk of trying a new product or service reduces. Consequently, the customers feel encouraged to try them out. 

Illustration/TBS

But, instead of building a brand image, the businesses end up doing the exact opposite. When the promotional period is over, and the business is offering its products or services at the normal price, the customers no longer feel encouraged to try out the products. Because they perceive that the business is eventually going to give discounts, the customers wait for them. And, due to not having enough sales, the business gives promotional offers again and again. Thus, the business becomes a "Discount Brand" in the minds of the customers and it becomes very difficult to come out of this vicious cycle.

So, how can a business keep itself out of the cycle of 'Discount Brand'? According to my opinion, the solution is simple. Firstly, the products or services must be of quality. Secondly, the price range should be reasonable. And thirdly, there must be some promotional contents as well to attract the attention of the target customers. For creating awareness, promotions are a must. 

So to paraphrase, instead of just giving promotional offers or discounts, create quality contents to attract the target market. If you are offering quality at a reasonable price, the customers will surely try it. 

After creating a stable customer base, the business can give seasonal discounts. The clothing brands, Gentle Park and Yellow, can be pointed out as some of the great examples in this regard. They have stable customer bases and are perceived as quality brands. They give discount offers twice or thrice a year. And when they do, they go stock-out.

Facebook is a crucial platform for any business to have a virtual presence. It provides huge exposures and marketing opportunities. Any Facebook startup requires a huge initial investment and all these investments would be a waste if a business turns into a "Discount Brand" in the minds of the customers. So, the entrepreneurs behind Facebook startups should realize the importance of building a long-term brand image instead of boosting short-term sales.

Iftekhar Jahan Shifat is a 4th year undergraduate business student and currently is pursuing bachelor's degree in business administration in Marketing from North South University.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.