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Opentables

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OpenTable
[Marketing Consultancy Report]
OpenTable
[Marketing Consultancy Report]

Table of Contents
Introduction …………………………………………………………………………..1
Summary……………………………………………………………………………….2
History…………………………………………………………………………………..4
Market & Competition……………………………………………………………….5
SWOT Analysis………………………………………………………………………..6
Porter’s Five Forces…………………………………………………………………..7
The Ansoff Matrix……………………………………………………………………..8
Product & Service……………………………………………………………………10
Promotional Strategy……………………………………………………………….12
Price Strategy…………………………………………………………………………14
Place & Distribution……………………..…………………………………………15
Recommendation……………………………………………………………………16
Implementation……………………………………………………………………...16
Conclusion……………………………………………………………………………19
Bibliography………………………………………………………………………….20

Introduction
OpenTable is an American public company, slated to be a wholly owned subsidiary of Priceline.com, that offers online real-time restaurant-reservation service. The firm provides online reservations at about 31,000 upscale restaurants around the world seating some 15 million diners a month.
The service allows users to search for restaurants and reservations based on parameters including times, dates, cuisine and price range. Users who have registered their email address with the system will then receive a confirmation email. Users can also receive OpenTable rewards points after dining (100 or 1,000); these points can be redeemed for discounts at member restaurants. The company also has a mobile application available in Apple's App Store, Blackberry App World, Google Play, Windows Phone Marketplace and Palm App Catalog that allows users to find and book dinner reservations. The company's home market consists of the United States, however, it has expanded in recent years to include markets including Canada, France, Germany, Japan, Mexico and the United Kingdom. On October 1, 2010, the company acquired toptable.co.uk (TopTable), a restaurant reservation site in the UK. On January 29, 2013, the company announced that it entered a definitive agreement to acquire Foodspotting. On June 13, 2014 the company agreed to a takeover offer by Priceline.com at $2.6 billion. Both companies said OpenTable would continue to operate as a separate business under the same management.
Summary
Decide a restaurant can be sometimes a very difficult task. What kind of food do we want? What’s on the menu? How expensive is it? Is it nearby? And many other questions that we have before going to any restaurant. Opentable aims to give a solution to this problem by providing “a fast, efficient way to find available tables that meet the desired criteria for type of food, price and location at a specified time.” But what really makes OpenTable unique is that it allows customers to make reservations online, making it a one-stop shop for all your dining needs. The success of the business is undeniable, as OpenTable has seated over 200 million people since its launch in 1998, and it keeps growing fast as five million people now turn to OpenTable every month.
Its main calling card is the Electronic Reservation Book which is a touch-screen system positioned at the restaurant’s host stand to replace the traditional reservation book. It serves to manage reservations, assign tables, recognize repeat diners, and remember preferences making online reservations possible linking real time availability with the Internet. Opentable also offers the option of making the reserve through restaurant´s own websites.
OpenTable is leading the online reservation market. Citigroup analysts estimate the company has more than a 90 percent market share in the U.S. online reservation business and they think that there is stillroom to grow. The company works in all fifty states and also in Canada, Germany, Japan, Mexico, and the United Kingdom. Their main competitor now is the phone reservation but it is a matter of time that the new technologies will replace this old method of booking a table.
In 2010-2011, OpenTable has increased its revenue by 53% up to $34.3 million. They have also expanded the number of restaurants they work with to 60% more and seated 53% more diners also during this period. These numbers all contributed to a consolidated net income of $6.3 million for the second quarter in 2011, while still having cash and short term-investments totaling $69.1 million, demonstrating sound financial footing.
OpenTable has two main types of competitors: online reservation ones and coupon ones. OpenTable’s main business has been the online reservation one, but it has recently started a service called Limelight that dabbles in the coupon business, stepping on the toes of the likes of Groupon and Restaurants.com. OpenTable has partnered with coupon dealer Savored, which offers discounts on dinner reservations to compete against Spotlight, which offers weekly gift certificates. And on the reservation side there are two more competitors: Urbanspoon that launched its own service called Rezbook (that directly competes with them, but it currently only has 800 restaurants) and Google that purchased Zagat (the restaurant rating service) in 2011, leading some to speculate that it would attempt to enter the reservation business as well.
With the appearance of all these new competitors; OpenTable is beginning to lose its competitive advantage as its service is no longer unique, it has been imitated, and there are emerging almost substitute products. In today´s world, it is very difficult to maintain the competitive advantage, so OpenTable must be ready to innovate in order to remain ahead.
History
OpenTable was founded in 1998 by Chuck Templeton and headquartered in San Francisco, California. It was incorporated on September 20, 2000. It was made to offer online accessibility for restaurant reservations through a web platform. Their website was launched in 1999 which allowed users to reserve tables online at their convenience to a limited selection of restaurants in San Francisco at the time. Since then, it has expanded to cover over 31,000 restaurants in the United States and also, internationally. The company had its initial public offering (IPO) on May 21, 2009 and listed on the NASDAQ stock exchange under the ticker symbol: OPEN. The underwriters were Merrill Lynch, Allen & Company, Stifel Nicolaus and Think Equity LLC. In 2010, OpenTable acquired Toptable.com, a reservation website based in UK for an estimated $55 million. By April 2012, OpenTable was available as an application on Kindle Fire, which seated diners in the United States, Canada, Germany, Japan, Mexico and the United Kingdom. In June 2013, the company had acquired JustChalo Inc. and in August 2013, the company announced that it acquired Rezbook which is Urbanspoon’s reservation management system for restaurants. On June 13, 2014 the company was bought by an online travel company, Priceline.com, for a 2.6 billion cash deal and was said to be operating as an independent business led by the management team under The Priceline Group offices in San Francisco.

Market & Customers
OpenTable makes their money by charging restaurants a one-time installation fee for reservation software/hardware, a monthly subscription fee, and a fee for each diner seated through the service. A higher fee of $1/diner booked directly through the company’s website compared to $0.25/diner booked through the restaurant’s website is an indicator of the value of OpenTable’s website as a customer referral tool. Therefore, this suggests that OpenTable is twice as effective as a marketing tool rather than through independent online reservations.
OpenTable provides an ERB (Electronic Reservation Book) touchscreen software that provides a real-time map of free tables in each restaurant floor, stores meal patterns for all parties, keeps a database of diners, helps maximize guest seating, attracts repeat business with email marketing, offers a rewards point system for loyal customers and saves time with automated reservations.
Though restaurants would have to pay a fee to utilize their online booking system, the service is free to diners. OpenTable has seated 25 million diners across 8,090 restaurants, at an average of 345 seats monthly or 14 seats daily per restaurant. It has 25,000 restaurant clients and seats 9 million customers per month. It is currently the market leader in the US and reported significantly profitable compared to their international locations in Germany, Japan and the United Kingdom, which only represents 5% of their total revenues.

SWOT Analysis
Strengths
* Monopoly - Harder for competitors to take over as most restaurants have built a huge customer database with OpenTable. It would be challenging and inconvenient for restaurants to switch systems. * Wide coverage in U.S and internationally.
Weaknesses
* Upcoming alternative - Cloud based system, IPad applications, Text/mail notifications for diners * High charges to customers - Other competitors providing cheaper costs and options * Very Saturated market - Lack of motivation in innovation to improve products and services. There is not much room for them to improve, as they don’t have any substantial competition. A company would have to be financially well supported, intuitive, and innovative and have a very solid and disruptive business model to provide competition for OpenTable.
Opportunities
* Enhancing Mobile Experience * Internalization * Exploring Blue Ocean * Strengthen and grow existing markets

Threats * Rise of new competition - New alternatives * Restaurant owner dissatisfaction - According to a blog written by Mark Pastore, there have been complaints on the restaurants’ behalf due to the fees they have to pay for OpenTable’s service. The income made is disproportionate to the money made paid to OpenTable. However, restaurants also feel a huge dependency on OpenTable as they don’t have a choice to discontinue the service either as it would reduce their customer base. * Lower priced competitors
Porter’s Five Forces
Bargaining Power of Suppliers - Rely on third-party service providers with various development and quality assurance related services Bargaining Power of Customers * Dinners: Decision to be a user’s or not depends on quality of user experience * Restaurants: If number substitute increases higher leverage to bargain on price of ERB
Competitive Rivalry * Direct Competition (with similar services): Online restaurant reservation.

* Indirect competition: * Restaurants review websites * Food delivery services * Offline restaurant information sources
Threat of New Entrants - Low barrier to entry into the table management solution market can result in intensified competition
Threat of Substitutes * Actual: Phone reservations * Potential: Introduction of a superior reservation management software by a competitor
The Ansoff Matrix
Using Ansoff’s Matrix, we analyzed OpenTable’s four different growth strategies and growth possibilities to determine the best form of recommendations for OpenTable to move forward.
Market Penetration Strategies (Existing Market, Existing Product): * The promotion of OpenTable’s website provides an alternative to their apps and an availability to other diners who use search engines to look for restaurants and online ratings and reviews on restaurants. * They provide potential restaurant clients with personalized selling and business advice through door-to-door sales force with OpenTable’s team of sales representatives by promoting their ERB system. * Working with other partners or companies like Yelp, Google and other partners allows OpenTable to cover all sources and forms of potential customers.
Product Development strategies (Existing Market, New Product): * Acquisition of major players in food delivery applications such as Eat 24 and Seamless would allow OpenTable to widen their scope in the Food and Beverage industry. * By further enhancing the dining experience of customers, OpenTable could provide an option for diners to preferred seating choices and pre-order options to reduce wait times. * Working on continuous improvements of OpenTable’s online reservation software could help maintain their network security and sustainability in order to avoid their reputation from being harmed. * Big Data: By gathering and utilizing personal data from diners such as providing customer surveys at the end of each reservation booking. This will provide opportunities for customization of their service according to diner’s needs.
Market Development Strategies (New Market, Existing Product): * Direct sales to new restaurants through cheaper software alternatives such as Opentable’s ‘Connect’ system that targets other restaurants who rely on walk-in customers. * Incentives such as providing OpenTable coupons or credit for online restaurant reviewers and dining rewards for frequent users could encourage and attract potential diners with their potential benefits. * Further international expansion by creating brand awareness and effective communication strategy to encourage areas/regions of infrequent diners to dine out more.
Diversification strategies (New Market, New Product): * Extend into other segments of food & beverage market to become the primary leader of that market by dominating all areas of the food industry therefore, widening their reach. * Partnerships with food delivery service industry such as Eat24, Grubhub and Orderahead could help widen their clientele in the food industry. * Sponsorships with famous food bloggers could extend their brand awareness through word-of-mouth. * Diversification of apps and their features allows greater functionality and * accessibility for diners on-the-go.
Product & Service
OpenTable is a leading service provider of instant online restaurant reservations for diners and reservation management systems for restaurants. The actual product is a software which delivers the convenience of booking reservations online to diners as well as the functionality of a computerized reservation system to restaurants. The augmented product is now a combination of subscription and reservation revenue:
Revenue Model * Reservation Revenue: The Company charges each restaurant $1 for every seated diner that books a reservation on openTable.com. * The Subscription Fees, is charged to restaurants for using OpenTable’s electronic booking system.
Product Features * Mobile Payment: OpenTable gives opportunity to diners to pay directly from their phone, reducing the wait time to pay for the check. * Ratings & Reviews: Diner’s are able to share their experience and rate restaurants. Brand Role Play - OpenTable has the credibility as being the pioneer for providing such logistics for restaurants. Restaurants know that OpenTable has the current largest reach of potential customers and therefore want to use them. Having seated over 200 million dinners in 20 k restaurants all over the world shows the reliability in their brand.
Product Life Cycle - OpenTable should be towards the later stages of growth and slowly transitioning into the maturity period. This is because despite being at a whopping 2.6 billion dollars there is a very big opportunity to further expand the brand worldwide especially after being acquired by Priceline. This allows them to have a bigger client base and considering how the world is slowly moving towards an app based dependency OpenTable has the world at their shoulders. Despite almost having monopoly of the market which could suggest they are already in the maturity stage, they have not had competitors that can give them a run for their money and none can compete with the opportunity for a much wider and deeper global expansion.
Objectives - The product line objectives is selling the reach of their software and database which is 2nd to none. They are able to charge premium prices due to their relative monopoly and reliability of their application.
Promotional Strategy
The business strategy significantly revolves around the promotion of the OpenTable website and it’s Electronic Reserve Book (ERB).Online restaurant reviewers were given monetary benefits upon providing links to the OpenTable website, however this form of advertising was not cost-efficient and although new visitors were increasingly brought to use the website, the cost far outweighed the revenue brought in through this strategy.
Following changes in management, the importance of personal selling and public relations grew as a door-to-door sales force was formed, targeting mostly expensive restaurants. OpenTable has a team of sales representatives that promote the ERB system to potential restaurants and also participate in numerous trade shows and conference to promote the system. This form of advertising and promotion was more effective as the concept spread to 50 states in the United States of America, as well as to over 1,000 restaurants elsewhere in the world. This form of personal selling is, indeed appropriate as it has increased the subscription rates and income of the company. In a world of a cold, emotionless digital surface, the presence of personalized connections, especially in terms of selling the product and also the follow up customer service, could clarify any doubts that an F.A.Q. tab cannot, while possibly gaining the trust of potential clients and restaurateurs. In this sense, there seems to be a proper balance between contemporary media and traditional forms.
However, if traditional media were categorized as mostly print media, OpenTable does not seem to have any investment in advertising through traditional media. Regardless of this lack of presence in traditional media, OpenTable is indeed a digital product and as such, the imbalance in media choices are appropriate and well-thought of because users of the product are mostly digital media users. Also, considering also the fact that traditional media would most probably incur more cost than effectiveness, this is a proper balance for the needs and goals of the company. OpenTable also uses Yelp and Google and other partners to cement its status as a default option for new restaurants, making their drive in digital media secure.

Price Strategy
The products of the company are mainly focused on the two services offered which are the OpenTable E.R.B., a computer terminal which essentially assists in running business in restaurants including seating arrangements, wait staff assignments, feedback from customers which could possibly lead to a more personalized experience for customers. Pricing of products include a one-time fee for installation and training costs which could range from $200 to $700 – depending on the company – and an additional monthly subscription fee also applies, ranging from a minimum of $199 per month with extra charges costing between $25 to $89, a month. Additionally, for each diner that completes his or her reservation, OpenTable receives a fee of $1 or $0.25 per diner depending if the reservations were made through OpenTable’s website or mobile app, as opposed to through the restaurant’s website using OpenTable’s software.
Open Table also has a lighter version of the reservation system called Connect, which deals mostly with restaurants that have, mostly, walk-in customers. In this system, OpenTable receives $2.50 per diner who completes his or her reservation through the OpenTable site, while a $0.25 fee applies for reservations made through the restaurant’s site using OpenTable software.
The strategy and strength of the business model that OpenTable adopts is that it is able to convert what was a fixed cost, for restaurants, into a variable one. This model is incredibly appealing to restaurateurs as many expenses in running a restaurant are non-variable as such utilities, rental and staffing. There are many competitive pressures which have resulted in renegotiations in relation to price. Depending on the type of adjustment in price, there could be a potential reduction in OpenTable’s future revenue.
In terms of competitor pricing, overseas options have proven to be more aggressive in terms of expanding and also, charging lesser fees, for example using Livebookings.com in Europe and Eveve in Scotland. Nonetheless, despite these credible competitors providing slight concern, OpenTable’s clientele is significantly higher than competitors, at over 24,000 restaurants and counting. OpenTable has indeed aligned itself with its target market pricing as well as assessed, although not adequately, elasticity of demand, which will show the in the way it copes with international pressures and competition as well as its willingness to negotiate.
Place & Distribution
Although figures vary widely from product to product, roughly a fifth of the cost of a product goes on getting it to the customer, but this is not our problem. 'Place' is concerned with various methods of transporting and storing goods, and then making them available for the customer, but in our case, we can offer the product to everyone as it consists in an online service that, thanks to our software platform, we can easily distribute.
So, as the distribution of our product is cheap and easy, our strategy will be to reach as many people as possible trying to target the most popular restaurants so that we keep attracting new customers.

Recommendations * Strengthen and grow existing market by enhancing the current diners’ experience, extending the mobile offering to android users. * Expand on mobile platform to respond to growing number of mobile users and make the current interface more user friendly * Diversify activities by acquiring a mobile application in the food delivery industry to enter a new market * Pursue the international expansion in major metropolitan cities.
Implementation
Strengthen and grow existing markets
Current Situation
As of now, you are only servicing ¼ of dinners that make restaurant reservations. Some of that is due to the fact that the website is not very user friendly or intuitive.
Procedure
We recommend that you strengthen your positioning by personalizing the dining experience. This can take several form. One of them is using Big Data that is collect from users to make their next reservation more convenient, intuitive.
Example: If a dinner always seems to order the same dish at restaurants, develop a feature that suggests some restaurants that have the best reviews for the same dish.
Continuously improve the software in hand. The current website is still basic and requires multiple steps. Develop options for users to sign in with their Facebook accounts, where you can access their preference information.
Include all your users by developing an android application, this is to strengthen your existing customer base so they do not feel left out as opposed to iPhone users.
Expansion of mobile platform
Current Situation
Your mobile interface is basic and has some bugs that prevents the customer to enjoy a seamless.
Procedure
We recommend that you develop your mobile platform and design. The mobile interface can be improved by fixing minor bugs and making the interface more intuitive.
Develop additional features that will make the dining experience more pleasant. For example: When available, given the option to dinners to choose if they would like to be seated by the windows.
Develop the option to buy “OpenTable” credits that can be redeemed at the restaurants for a larger value. Example: A $50 OpenTable credit will have a value of $55 to use at one restaurant.

Diversification (Blue Ocean)
Current Situation
As you currently operate solely in the dining industry while some related markets are showing signs of growth.
Procedure
We suggest that you cease some growth opportunities that are happening in the food delivery space, this will broaden your portfolio by doing a strategic acquisition of the application Eat24 . This will add some new assets and new talent to your portfolio. Acquiring a company that i has significant expertise in the space will save time, resources to deploy and possible errors that you may face if you were to get in the space as OpenTable.
We encourage you to keep investing in research and development to find innovative solutions that will help accomplish your mission to cover all aspect of the dining experience in the best possible way.
Internalization
Current Situation
You are present in the UK, Japan, Mexico, Spain and Germany
Procedure
We recommend you pursue your international expansion in larger metropolitan cities that have a large part of their population that share a similar lifestyle of dinning out in Europe, Asia and South America.
Use two different strategies to enter those markets.
Option 1: Duplicate your current model by deploying a sales forces on the ground to sign up restaurants. Hire local advertising agencies to run advertising campaigns in global and metropolitan cities
Option 2: Consider acquisitions of similar startup in the market of interest as you had previously done with Toptable.com in the United Kingdom.
Conclusion
The next steps described in this report has for purpose to reconcile the mission of OpenTable and the actual perception of its customers and lay a path for growth. Moving forward we anticipate to see major improvements in the mobile offering of the company by using a customer centric approach to personalize the user experience. A pursuit of opportunities in international markets as well as one or several acquisition efforts in the food delivery space. We are confident that with this plan OpenTable will secure its monopoly and become a serious competitor to the current players in the food delivery category.

Bibliography * Investor FAQs. (n.d.). Retrieved October 28, 2014, from http://investors.opentable.com/faq.cfm * Open Table Case Study Analysis. (n.d.). Retrieved October 28, 2014, from http://www.ecommerce-digest.com/open-table-case-study.html * Priceline books OpenTable for 2.6bn. (2014, June 14). Retrieved October 28, 2014, from http://www.newyorktelegraph.com/index.php/sid/222889441 * Wegener, J. (2009, February 3). OpenTable and Restaurant Marketing at Back of the Envelope | Jonathan Wegener's Technology/Marketing Blog. Retrieved October 28, 2014, from http://blog.jwegener.com/2009/02/03/opentable-ipo-analysis-restaurant-marketing/ * Open Table Case Study Analysis. (n.d.). Retrieved October 28, 2014, from http://www.ecommerce-digest.com/open-table-case-study.html * Kooser, A. (2012, October 1). A wave of competition goes after OpenTable's Throne. Retrieved October 28, 2014, from http://www.restaurantbusinessonline.com/controlling-costs/restaurant-technology/articles/wave-competition-goes-after-opentables-throne * Pastore, M. (2010, October 22). Is OpenTable Worth it? Retrieved October 28, 2014, from http://incanto.biz/2010/10/22/is-opentable-worth-it/ * Anderson, A. (2011, January 2). Quora. Retrieved October 28, 2014, from http://www.quora.com/Are-there-OpenTable-competitors-If-so-who-are-they-and-how-are-they-doing * OpenTable (OPEN). (n.d.). Retrieved November 11, 2014, from http://www.wikinvest.com/stock/OpenTable_(OPEN) * (n.d.). Retrieved November 11, 2014, from http://www.bloomberg.com/news/2014-06-13/priceline-to-buy-opentable-in-deal-valued-at-2-6-billion.html * http://apigee.com/about/press-release/apigee-study-mobile-app-dependency-high-varies-country * Quora. (n.d.). Retrieved November 11, 2014, from http://www.quora.com/How-much-does-OpenTable-charge-restaurateurs-for-the-service * OpenTable goes beyond reservations, opens private beta for new dining payments service. (n.d.). Retrieved November 11, 2014, from http://venturebeat.com/2014/02/07/opentable-goes-beyond-reservations-opens-private-beta-for-new-dining-payments-service/ * How To Build Customer Profiles For Your Social Media and Content Strategy. (n.d.). Retrieved November 26, 2014, from http://www.steamfeed.com/customer-profile-social-media-content-strategy/ * Incanto. (n.d.). Retrieved November 26, 2014, from http://incanto.biz/2010/10/22/is-opentable-worth-it/ * OpenTable Restaurant. (n.d.). Retrieved November 26, 2014, from https://www.otrestaurant.com/resources/Training * Pay with OpenTable. (n.d.). Retrieved November 26, 2014, from http://pay.opentable.com/ * (n.d.). Retrieved November 26, 2014, from http://www.sec.gov/Archives/edgar/data/1125914/000104746909000513/a2190140zs-1.htm#ce41301_prospectus_summary * (n.d.). Retrieved November 26, 2014, from http://www.sec.gov/Archives/edgar/data/1125914/000104746909000513/a2190140zs-1.htm#ce41301_prospectus_summary * OpenTable's Success Story - Salesforce.com. (n.d.). Retrieved November 26, 2014, from http://www.salesforce.com/customers/stories/opentable.jsp * Wegener, J. (2009, February 3). OpenTable and Restaurant Marketing. Retrieved November 26, 2014, from http://blog.jwegener.com/2009/02/03/opentable-ipo-analysis-restaurant-marketing/ * (n.d.). Retrieved December 2, 2014, from http://www.sec.gov/Archives/edgar/data/1125914/000104746909000513/a2190140zs-1.htm * Open Table Case Study Analysis. (n.d.). Retrieved December 2, 2014, from http://www.ecommerce-digest.com/open-table-case-study.html * Randall, B. (2011, November 8). OpenTable: Trying Not to Screw Up Free Lunch. Retrieved December 2, 2014, from http://seekingalpha.com/article/309014-opentable-trying-to-not-screw-up-a-free-lunch?page=2 * Miller, E. (2011, October 26). OPENTABLE EXPLAINED: Here's How The Company Makes Money. Retrieved December 2, 2014, from http://www.businessinsider.com/opentable-explainer-2011-10?IR=T&

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