PROCESS BOOK
Chris Tsuyuki | Miaolin Sheng | Pavani Chandak
SERV 711 | Prof. Xenia Viladas | Spring 2019
Table of Contents
Part 01: Introduction to Groupon
Part 04: New Service Offering
History
New Business Model Canvas
Existing Business Model Canvas
Service Offering Map Existing Service Blueprint with New Innovations
Part 02: Value Proposition Current Value Proposition: Customer Current Value Proposition: Merchant Opportunity Spaces Service Offering Innovation: Last Minute Booking Part 03: Competitor Analysis (for new service offering) Hotel Tonight Orbitz: Last-Minute Deals Loudie Competitor Key Takeaways
Part 05: Stakeholder and Ecosystem Map
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PROJECT OBJECTIVE
The purpose of this project is to explore and analyze an existing service, then apply service design principles to innovate and redesign it. We implemented a combination of secondary and auto-ethnographic research and the use of service design tools and frameworks to thoroughly analyze.
The Team
Chris Tsuyuki
Miaolin Sheng
Pavani Chandak
Service Design, M.F.A
Industrial Design, M.A
Design Management, M.A
Design Management, M.F.A
+ INTRODUCTION TO GROUPON Using both secondary and auto ethnographic research, we began to familiarize ourselves with and analyze Groupon’s history, core offerings, values and business model.
The Team Launched in November 2008, Groupon is a Chicago-based e-commerce marketplace and platform that connects customers with merchants by offering goods, services, activities, travel and coupons at a discount. They are active in fifteen countries and have recently increased their B2B service offering to merchants After founder and CEO Andrew Mason’s ousting in 2013, he was replaced by co-founder Lefkofsky. In 2015, Rich Williams took over as CEO. Lefkofsky remains Chairman of the Board with eight other board members sitting on the Board of Directors as of 2017.
fun fact Groupon's first deal was a two-for-one offer for pizzas at Motel Bar, a restaurant located in the building of its first office in Chicago
Introduction to Groupon
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Introduction to Groupon
Introduction to Groupon
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Groupon (GRPN.O) is a publicly traded company whose current stock is valued at $3.61 per share, significantly decreased since Groupon’s 2011 IPO of $28 per share.
Introduction to Groupon
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The first market for Groupon was Chicago, followed soon thereafter by Boston, New York City and Toronto. By October 2010, Groupon was available in 150 cities in North America and 100 cities in Europe, Asia and South America, and had 35 million registered users. By the end of
150 Cities
March 2015, Groupon served more than 500 cities worldwide, nearly 48.1 million active customers and featured more than 425,000 active deals globally in 48 countries.
Introduction to Groupon
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Timeline for Key Changes
Introduction to Groupon
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Main Offerings Groupon’s main offering is in its B2C marketplace platform, which connects merchants to users via discounts on goods and services. It provides deals across a variety of categories with health & beauty and restaurants as the most popular. In recent years, Groupon has expanded its offering to include travel and B2B merchant services.
Introduction to Groupon
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Current Offerings Groupon+
Coupons
Voucherless meal deals paid for by Visa or Mastercard; once
Coupon aggregator and database
used, users receive 30% of the value spent back to their accounts
Groupon Merchant Groupon Getaways
A set of marketing tools aimed at small and local businesses
Travel division for hotels, activities, cruises and group trip deals
Groupon Select Groupon Local
Monthly membership model that applies additional discounts on
Local deals on products, services, activities, and food & drinks
top of existing Groupon deals
. Groupon Goods Daily product deal site where branded products are sold at a discount .
Introduction to Groupon
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Trigger
Service Encounters Map
Review
Website Advertisements
Chat Video Advertisements
TV Advertisements
Phone
Customer Support Products
Coupons / Code
Services E-tickets
Groupon Mobile App
Arrive
Groupon Website Credit Card Apple Pay
PayPal
Payment
Introduction to Groupon
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Target Audience Groupon’s primary audience is female, between the ages of 18 and 35, with 50% of that user base’s salary above $70,000. While their reach is nationwide and global, their core user group lives in the Pacific and Midwest regions of the U.S.
Introduction to Groupon
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Company Culture and Industry Relevance
Groupon has 6,576 employees and reported $2.6 billion in global revenue for 2018. Founder and CEO Andrew Mason was removed in 2013, in part because of his creation of an immature and unprofessional company culture. In 2017, Groupon continued to lack in diversity. Their offices globally were 56% male and 44% female, with 70% of those in leadership roles being male. Globally, 62% of the office makeup was white, 70% of leadership being white. As one of the largest and first companies to emerge in this digital space, Groupon continues to lead in this space. However, many forecast that the daily deal and online coupon industry is a dying one as it provides a low quality service experience, is not sustainable on the merchant side and fails to convert deal seeking users into loyal customers.
Introduction to Groupon
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Groupon’s Future Strategy (2017)
To expand Groupon’s open platform: through partnerships with Live Nation, Expedia, Viator, Goldstar, FanXchange, GrubHub, ParkWhiz, American Express/Visa/Mastercard; distribution channels Button, OnStar; travel reward program for airline miles and hotel points To increase international potential: by improving usability of the mobile app with better checkout/shopping cart; growing local merchant relationships in large cities, pursuing national and third-party offers To increase operational efficiency: by shifting strategy from hyper growth to profitable growth; creating lean operations; expanding Shared Service Centers and Engineering Development Centers
Introduction to Groupon
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Existing Business Model Canvas KEY PARTNERS
Payment platform and credit card merchant system
KEY ACTIVITIES
VALUE PROPOSITION
Email marketing
Connecting merchants to customers by offering goods and services at a discount
Developing app Developing and maintaining customer and merchant database Business development KEY RESOURCES
Geo-targeted advertising and marketing Small business marketing tools
CUSTOMER RELATIONSHIPS
CUSTOMER SEGMENTS
Customer
Access to quality goods and services offered at a discount
Female, aged 18 - 35
Merchant
Ability to reach broad new customer base
Merchants interested in selling goods and services at a discount
Both
CHANNELS
Website, email, mobile app
Website, mobile app
Customer and merchant
Email campaigns
datebase
Social media channels B2B sales
COST STRUCTURE
REVENUES
Business development for merchant acquisition
Percent of sales from merchant partnerships
Operating expenses, salaries
Marketing fee charged to merchant partnerships
Advertising and marketing expense
Subscription fees
App and website development and infrastructure
Introduction to Groupon
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VALUE PROPOSITION
We first used the Value Proposition Canvas to better understand Groupon’s current value proposition for both merchant and customer users. This helped us track each user’s tasks, pains and gains, and identify potential solutions. From this we identified three opportunity spaces for redesign and innovation.
Current Value Proposition Canvas Merchant channel marketing strategy
generate service package
new customer gets extra discount
additional revenue stream
for first time purchase
via groupon
last minute
offer maintenance for request
booking
merchant booking / offering
new customer experience service
introduce CRM merchants customer support via phone
experiences
marketing and promotion
Gains Customer Job
Product & Services
receive merchant fee
Pain Relivers
use influencer to package
marketing exposure
Gain Creators
department for
get new customers
opportunities for merchants to sell perishable offerings
create groupon loyalty program offer repeat purchase discount
more aggressive marketing and advertising
decrease discount
24 hour customer support
promotion motivated
Pains
sell goods and services
customers do not return make a profit
not much customer service available
low sales
loose money because of fees and steep discounts
Value Proposition
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Current Value Proposition Canvas Customer
editorial focused emails to help
access to quality goods and
choose deals
services at steep discounts refer a friend to deals you liked
good experience
fun and inexpensive services
exposure to new goods Gain Creators
and services
Product & Services Pain Relievers
better screening process for
merchants redesign UI/UX
allow multiple purchase of discounts
use professional or verified reviews
too many offers,
don’t know
stronger business development to get new merchants
Customer Job
quality and inexpensive
goods
Pains
which one to choose
try new things with low risk
cluttered and confusing
UI / UX decrease discount
Gains
not trustworthy
lack of variety of offering one time discounts
Value Proposition
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Opportunity Spaces
Value Proposition
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Service Offering Innovation Last-minute booking A primary failing in Groupon’s business model is rooted in its service offering to its merchant user base. The current customer relationship provides merchants access to a customer base but requires merchants to sell their services at a significant discount while also paying taxes and a marketing fee. This creates an unsustainable and unprofitable situation for merchants, who often end up selling services at a loss. Our innovation hinges on the notion of perishability from the IHIP paradigm (Intangibility, Heterogeneity, Inseparability, Perishability) from a service standpoint. Certain service offerings can be categorized as perishable, such as unbooked or surplus hotel rooms, flights, ticketed events, or spa and beauty services. Assuming that merchants would sell those perishable services at a steep discount rather than take a total loss, Groupon could pivot their relationship with merchants to a last-minute booking value proposition.
Value Proposition
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+ COMPETITOR ANALYSIS In order to redesign Groupon’s current value proposition and service offering, we researched a number of competitors working in the last-minute booking service landscape. We analyzed their value propositions, customer segments and other features to better inform our redesign
Hotel Tonight
Value Proposition - Customer
Customer Segments - Customer
Other Features
Convenience and usability via mobile app
Business travelers
Daily mystery hotel offer at steep discount
Quality service offering at a discount
Leisure travelers Locals
Curated offering
Price sensitive travelers
Saved searches and favorites allows customers to watch deals
Transparent and trustworthy reviews Gamified rewards experience Concierge service for select bookings and premium users
Value Proposition - Merchant
Customer Segments - Merchant
Reliability as a marketplace
Chain hotels
Marketing and advertising
Boutique hotels
Competitor Analysis
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Orbitz: Last-Minute Deals
Value Proposition - Customer
Customer Segments -Customer
Booking of travel services as standalone offering or
Business travelers
part of a service package
Leisure travelers Price sensitive travelers
Wide variety of quality service offerings at a discount
Value Proposition - Merchant
Customer Segments - Merchant
Access to customer base
Chain hotels
Marketing and advertising
Boutique hotels
Other Features Daily mystery hotel offer at steep discount
Saved searches and favorites allows customers to watch deals
Airlines Car rentals Cruises Activities Vacation rentals
Competitor Analysis
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Loudie
Value Proposition - Customer
Customer Segments - Customer
Other Features
Convenience and usability via mobile app
Music lovers
Instagram events video footage
Access to live events for free
Comedy lovers
Geo-targeted marketing Concert discovery Connects users via their social networks
Value Proposition - Merchant
Customer Segments - Merchant
Access to customer base
Concert promoters
Advertising and artist promotion
Ticket issuing agencies Event venues Artists
Competitor Analysis
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Competitor Key Takeaways
Mobile First Customers are more focused on apps so the mobile experience must be convenient and accessible
Curated Offering Customers prioritize quality over quantity and a curated offering gives customers the feeling of a premium experience
More Than Just Offerings Integrating aspects such as discovery, content, social media integration or gamification encourages more regular interaction with customers
Trustworthy Relationships For both merchants and customers, trust and reliability are key. This can be strengthened through reviews, transparency and consistency of offering
Competitor Analysis
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+ NEW SERVICE OFFERING Using service design tools and frameworks, we fleshed out our service offering using a business model canvas, service offering map and service blueprint.
New Service Offering
The business model canvas aided us in laying out the framework of the redesign and all aspects necessary to supporting the value proposition and offering. The service offering map represents the new core service, all enabling services including those that are being redesigned, and the new addition of differentiating services. The service blueprint maps out the service experience for both merchants and customers, all supporting activities, artifacts and partnerships. It shows both the existing experience and the new elements of the redesigned offering and experience.
New Service Offering
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New Business Model Canvas KEY PARTNERS
Payment platform and credit card merchant system
KEY ACTIVITIES
VALUE PROPOSITION
Training and scripting of customer service
Connecting merchants to customers by offering goods and services at a discount
Marketing focused on new serviceoffering Developing and improving app and merchant database to support new offering Business development
Geo-targeted advertising and marketing Small business marketing tools
CUSTOMER RELATIONSHIPS
CUSTOMER SEGMENTS
Customer
Access to quality goods and services offered at a discount
Female, aged 18 - 35
Merchant
Ability to reach broad new customer base
Website, mobile app
Website, email, mobile app
Email campaigns Social media channels
Customer Relationship
B2B sales
Management Department COST STRUCTURE
Business development for merchant acquisition
Both
CHANNELS
KEY RESOURCES
Customer and merchant
Merchants interested in selling goods and services at a discount
REVENUES
Percent of sales from merchant partnerships
Operating expenses, salaries Advertising and marketing expense
Tiered user structure with premium offering
App and website development and infrastructure
New Service Offering
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Service Offering Map
Business Development & B2B Sales Customer
Small Business
Relationship
Marketing Tools
Managemt Customer
Last-Minute
Premium
Service
Booked
Service
Scripting
Services
Offering
Geo-Targeted
Customer
Advertising &
& Merchant
Marketing
Database
Payment
Core Service Enabling Service Differentiating Service Redesigned Enabling Service New Service Offering
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Service Blueprint
New Service Offering
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+ SERVICE ECOSYSTEM & STAKEHOLDER MAP To fully understand our new service offering, we mapped all key stakeholders. We then created a service ecosystem map, which shows all actors and how they exchange value between one another, as well as the value flows throughout the entire ecosystem.
Stakeholder Map
Service Ecosystem and Stakeholder Map
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Service Ecosystem Map
Service Ecosystem and Stakeholder Map
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References https://digit.hbs.org/submission/hotel-tonight-a-travel-winner/
https://knowledge.wharton.upenn.edu/article/death-daily-deal/
https://marketrealist.com/2014/05/orbitz-worldwide/
https://expandedramblings.com/index.php/groupon-statistics-facts/
https://www.foxbusiness.com/features/elevator-pitch-loudie-app-for-concert-lovers
https://www.groupon.com/blog
https://www.alleywatch.com/2015/05/this-nyc-starup-lets-you-check-out-the-show-before-you-get-your-tickets/ http://www.marketingespresso.net/groupon-bm https://www.quora.com/What-is-Groupons-business-model https://www.thinkwithgoogle.com/advertising-channels/video/market-reach-beyond-demographics/ https://jamiedunham.wordpress.com/2011/06/14/marketing-to-women-the-demographics-of-groupon-and-living-social/ https://money.cnn.com/2018/02/02/news/companies/groupon-super-bowl-ad-2018/index.html https://money.cnn.com/2016/10/26/technology/groupon-buys-livingsocial/index.html https://www.statista.com/topics/824/groupon/ https://www.reuters.com/finance/stocks/overview/GRPN.O https://en.wikipedia.org/wiki/Groupon
References
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