Case Study Questions

Chapter 9

1) Why will OpenTable competitors have a difficult time competing against OpenTable?

 OpenTable has built a commanding advantage by building scale quickly, and benefiting from the network effects of being the first, and the largest. As long as it continues to meet the expectations of restaurants and diners, it should be able to maintain and increase this lead.

2) What characteristics of the restaurant market make it difficult for a national reservation system to work?

 The market is highly fragmented, with large regional differences. Many, if not most, of the thousands of small restaurants are not computer experienced, and will not have the spare resources to participate.

3) How did OpenTable change its marketing strategy to succeed?

 Originally, OpenTable sought to market itself targeting national chains and by paying online restaurant reviewers for links to the OpenTable Web site. This was too expensive and was focused solely on the $1 per reservation revenue. In its second strategy, OpenTable focused on just four geographic areas, each of them large and home to expensive large restaurants. It offered not just to send diners to restaurants but also to provide a customer relationship management system so restaurants could know and serve their customers better.

4) Why would restaurants find the SaaS model very attractive?

 Because restaurants do not typically have a trained IT staff, the SaaS model is ideal. All that is required is the purchase of PCs, and training on how to use the system, which is provided by OpenTable.