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Case Code: MKTG391
Case Length: 21 Pages 
Period: 2014-2018   
Pub Date: 2019
Teaching Note: Available
Organization : Snap Inc.
Industry :Multimedia Messaging App
Countries : United States
Themes: Product Redesign
Case Studies  
Business Strategy
Human Resource Management
Leadership & Entrepreneurship

Snapchat: Failed Redesign

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Snapchat had the first mover advantage in the ephemeral messaging and vertical video space. The app exhibited the need of millennials to consume ethereal and authentic content, taking into account their intense need not to miss out on the happenings. The growing popularity of the app stemmed from the fact that the shared content got deleted automatically, providing a good privacy option to users while still allowing them to communicate in an entertaining and effective way. Snapchat became one of the most popular social media sites in the world and disrupted the core social media platforms of companies such as Facebook and Instagram as well as various messaging applications and telecom companies..

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With the app’s increasing popularity and the advantage of its coveted demographic, Mark Zuckerberg, CEO of Facebook, extended a US$3 billion buyout offer for Snapchat in 2013, which Spiegel turned down. After its failure to buy Snapchat, Facebook launched an app called Poke for sending ephemeral photos, videos, and text and continued to copy some of the most popular features of the app such as Snapchat Lens. Instagram also blatantly copied Snapchat Story and launched Instagram Stories in August 2016. ..


Realizing the need to take drastic measures, Snap decided to redesign the app to significantly re-disrupt the social media sphere and boost its sagging revenue. More importantly, the company felt the necessity to address the complaints by new users, specifically those from the older generation, who found the app difficult to understand and hard to use...


But to its dismay, Snapchat soon faced a backlash to the redesign when its global roll-out began. When it first rolled out its redesigned app in January 2018 to select group users in the UK, Australia, and Canada, it met with immediate resistance. In these countries, 83% of App Store reviews (1,941) for the update were negative with one or two stars . ..


Despite continuing concerns and a growing backlash over the redesign, Spiegel stuck to his guns about the changes in the app. “The redesign lays the foundation for the future of both our communication products and our media platform, and we look forward to doubling down on both,” he said. Earlier, Spiegel acknowledged that it would take time for people to get used to the changes from the redesign...


Amid adverse reactions from long-time Snapchat users to the app redesign and the mounting doubts of analysts over the company’s future, Snap reconsidered going back to the old design. Spiegel announced that Snap would tweak its redesign amid “some disruption” in the Snapchat community...


Snap had trouble sustaining momentum after the app was redesigned. It was facing a slew of challenges – the slowest-ever growth rate, declining revenue per user, and expanding losses. It had to fight multiple battles to bring back its mojo and restore investor confidence, analysts said. Snap’s shares were down 54% since the IPO and nearly 25% in 2018. Snap issued its first-ever revenue guidance for the Q3 2018,..


Exhibit I: Snap Daily Active Users vs. Growth Rate (From Q1 2014 to Q2 2018)
Exhibit II: Features of Snapchat
Exhibit III: Snap’s Quarterly Revenue by Region (in millions USD)
Exhibit IV: Most Popular Mobile Messaging Apps in the US as of May 2018
Exhibit V: Snap’s Quarterly Average Daily Active Users (in millions)
Exhibit VI: Snap’s Consolidated Statement of Operational Data
Exhibit VII: Comparison of Revenue, Operating Margin, and Market Share of Snap with Rivals
Exhibit VIII: Snap’s Consolidated Statement of Operations
Exhibit IX: Consumers Impression in the US: Snapchat
Exhibit X: Snap’s Response to Complaints
Exhibit XI: Snap’s Quarterly Average Daily Active Users (in millions)
Exhibit XII: Market Summary of Snap Inc (May 2018)
Exhibit XIII: Snap’s Ad Pricing Structure