Case Study Questions
1. What characteristics of the restaurant market made it difficult for a reservation system to work?
The restaurant market has a couple of challenges that make it difficult for a reservation system to work. To start with, the restaurant industry has been fragmented. Additionally, restaurants tend to be local which further adds to the difficulty of the reservation systems. Another characteristic that challenges the industry is the number of no shows on reservations.
2. How did OpenTable change its marketing strategy to succeed?
OpenTable started by charging a flat fee for their service package. As competition moved in, OpenTable moved to a subscription base with a transaction fee. Another strategy OpenTable utilized was to narrow its market down to four large cities. This strategy allowed them to focus on generating revenue to counter their previous strategy which was costing them to lose money.
3. Why would restaurants find the SaaS model very attractive?
There are a couple reasons a restaurant would find the SaaS model attractive. To start with, purchasing software online is quick and easy. This option helps to get the new software system operational in an efficient and cost-effective manner. Additionally, software and other services are becoming more readily available online. Another benefit to the SaaS model is that more and more exposure is coming from online. The software can tie into online marketing and reservation more easily. As more and more customers move to online platforms, the SaaS model become more attractive to business such as restaurants.
4. What challenges does OpenTable face?
OpenTable faces challenges such as market share competition with other online reservation services. Some competitors have experience in other online reservation services and are transferring their knowledge into online restaurant reservations. Another challenge to OpenTable is their revenue model. To be competitive, they need to continue to improve service quality and features while trying to keep prices in line with other companies in this industry.
2. Find an example not mentioned in the text of each of the four types of online retailing business models. Prepare a short report describing each firm and why it is an example of the particular business model.
Omni-Channel Merchants: Disney is a great example of for this category of merchants, as they have a presence in several different markets. They provide online access to entertainment, merchandise, and other products geared toward their loyal customers. Disney has put a lot of effort into acquiring a diverse collection of content from Pixar to Marvel. These all provide Disney with an opportunity to expand their market presence while opening new channels for distribution.
Virtual Merchants: Travelociy is an example of a virtual merchant. They provide the platform to search for your travel needs. They give you the opportunity to package a vacation deal to include air fare, hotel, and rental cars. You also pay for these items at the time of booking online. Through this business model, they do not need physical stores to conduct business.
Catalog Merchants: Sears is an example of a merchant that uses a catalog. While they have physical stores, customers also have the option to shop through online catalogs to place orders. This model brings the ability to shop from home while using instore pickup for some stocked items.
Manufacture Direct Merchants: Bose provides an example of a Manufacture Direct Merchant. They build products but do not have their own retail stores. Their products may be found in other retail stores or direct purchase from the manufacture. This model creates an opportunity to sell retail without the overhead costs of having some type of store to maintain.
3. Drawing on material in the chapter and your own research, prepare a short paper describing your views on the major social and legal issues facing online retailers.
Online retailers face a few issues related to social and legal issues while conducting e-commerce. Social issues come into play when e-retailers are dealing with how to navigate the social media networks. One issue they face is what social media networks are most desirable to market on. Another social issue they face is how to control or mitigate negative reviews posted on social media. Along with social issues, these companies face some legal issues as well. The major legal issue that e-commerce faces is security. These companies will need to continue to combat fraudulent activities online. Fraud can stem from stolen card information to people making fraudulent purchases.