Harvard Case - What's the Deal with LivingSocial?
"What's the Deal with LivingSocial?" Harvard business case study is written by Michael I. Norton, Luc Wathieu, Betsy Page Sigman, Marco Bertini. It deals with the challenges in the field of Marketing. The case study is 18 page(s) long and it was first published on : Feb 24, 2012
At Fern Fort University, we recommend LivingSocial pivot its business model to focus on a curated marketplace for local experiences, leveraging its existing user base and brand recognition. This strategy involves transitioning from a daily deal platform to a platform that offers a wider range of curated experiences, emphasizing quality, exclusivity, and personalized recommendations. This shift will address LivingSocial's declining growth, enhance its brand image, and tap into the growing demand for unique and memorable experiences.
2. Background
LivingSocial was a daily deal website that offered discounted deals on local goods and services. It experienced rapid growth in the early 2010s, but its popularity declined as competitors emerged and consumer preferences shifted. The case study explores the challenges LivingSocial faced, including declining user engagement, competition from Groupon, and a need to adapt its business model to remain relevant.
The main protagonists are the LivingSocial management team, who are tasked with finding a way to revitalize the company and regain its market share. They must navigate the changing landscape of the online deals market, identify new opportunities, and implement a strategy that will attract and retain customers.
3. Analysis of the Case Study
To analyze LivingSocial's situation, we can utilize the following frameworks:
1. SWOT Analysis:
- Strengths: Strong brand recognition, established user base, data on consumer preferences, experience in online marketing and customer acquisition.
- Weaknesses: Declining user engagement, reliance on a single business model, limited product differentiation, competition from established players like Groupon.
- Opportunities: Growing demand for unique experiences, untapped potential in curated marketplaces, ability to leverage technology and analytics for personalization.
- Threats: Competition from established players, evolving consumer preferences, potential for new disruptive technologies.
2. Competitive Analysis:
LivingSocial faces stiff competition from established players like Groupon, as well as newer entrants offering unique experiences. Its competitive advantage lies in its established user base and brand recognition. However, it needs to differentiate itself by offering a curated selection of high-quality experiences, personalized recommendations, and a user-friendly platform.
3. Consumer Behavior Analysis:
Consumers are increasingly seeking unique and memorable experiences, particularly in the realm of travel, entertainment, and leisure activities. They value personalization, authenticity, and convenience. LivingSocial can leverage this trend by offering a curated marketplace that caters to these desires.
4. Product Lifecycle Management:
LivingSocial's daily deal model has reached maturity and is facing declining growth. The company needs to move beyond this model and explore new product offerings that align with evolving consumer preferences. This requires a shift towards a more curated and personalized experience.
5. Value Proposition Development:
LivingSocial's new value proposition should focus on offering a curated marketplace for unique and memorable experiences. It should emphasize quality, exclusivity, and personalization, providing customers with a platform to discover and book experiences that align with their interests and preferences.
4. Recommendations
LivingSocial should implement the following recommendations to revitalize its business:
1. Pivot to a Curated Marketplace for Local Experiences:
- Transition from a daily deal platform to a marketplace that offers a wider range of curated experiences.
- Focus on high-quality, unique, and exclusive experiences that cater to specific interests and demographics.
- Leverage data and analytics to personalize recommendations and provide tailored experiences to individual users.
2. Enhance Brand Positioning and Marketing Strategy:
- Reposition LivingSocial as a premium platform for discovering and booking unique experiences.
- Develop a strong brand identity that emphasizes quality, exclusivity, and personalization.
- Implement a targeted marketing strategy that leverages social media, content marketing, and influencer partnerships to reach the desired target audience.
3. Optimize the User Experience and Platform:
- Develop a user-friendly platform that facilitates seamless browsing, booking, and management of experiences.
- Incorporate features that enhance personalization, such as recommendations based on user preferences and past experiences.
- Offer excellent customer service and support to ensure a positive user experience.
4. Expand Product Offerings and Partnerships:
- Explore new categories of experiences, such as travel, entertainment, and leisure activities.
- Partner with local businesses and organizations to offer exclusive and unique experiences.
- Create curated packages and bundles that cater to specific interests and demographics.
5. Leverage Technology and Analytics:
- Utilize data and analytics to understand user preferences, optimize product offerings, and personalize recommendations.
- Explore the use of AI and machine learning to enhance personalization and improve the user experience.
- Implement a robust CRM system to manage customer relationships and provide targeted marketing campaigns.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: LivingSocial's core competency lies in its ability to connect consumers with local businesses and experiences. The curated marketplace strategy aligns with this core competency while addressing the need for a more relevant and engaging platform.
- External customers and internal clients: The recommendations cater to the evolving needs of consumers who seek unique and memorable experiences. They also address the concerns of internal clients, such as a need for increased user engagement and revenue growth.
- Competitors: By focusing on a curated marketplace, LivingSocial can differentiate itself from competitors like Groupon and attract a more discerning customer base.
- Attractiveness ' quantitative measures: The curated marketplace strategy has the potential to generate higher revenue per customer, improve customer retention, and increase brand loyalty. These factors contribute to a more attractive business model with improved financial performance.
6. Conclusion
LivingSocial has the potential to become a leading platform for curated local experiences. By pivoting its business model, enhancing its brand positioning, and leveraging technology and analytics, it can attract a new generation of customers seeking unique and memorable experiences. This shift will require a strategic approach to marketing, product development, and customer engagement.
7. Discussion
Other Alternatives:
- Continuing with the daily deal model: This option would require significant investment in marketing and customer acquisition to maintain market share, but it is unlikely to achieve sustainable growth.
- Focusing on a specific niche: This option could be successful but would limit LivingSocial's market reach and potential for growth.
Risks and Key Assumptions:
- Consumer adoption: The success of the curated marketplace model depends on consumer adoption and willingness to pay for premium experiences.
- Competition: Established players and new entrants may pose significant competition in the curated experience market.
- Technology and analytics: The effectiveness of personalization and recommendations relies on robust technology and analytics capabilities.
Options Grid:
| Option | Pros | Cons |
|---|---|---|
| Curated Marketplace | Increased revenue per customer, improved customer retention, stronger brand positioning | Requires significant investment, potential for competition, relies on consumer adoption |
| Daily Deal Model | Established business model, known customer base | Declining growth, limited differentiation, intense competition |
| Niche Focus | Targeted market, potential for higher margins | Limited market reach, potential for niche saturation |
8. Next Steps
Timeline with Key Milestones:
- Month 1: Conduct market research and develop a detailed business plan for the curated marketplace.
- Month 2: Rebrand and reposition LivingSocial as a platform for curated experiences.
- Month 3: Launch the curated marketplace platform with a selection of high-quality experiences.
- Month 4: Implement a targeted marketing campaign to reach the desired target audience.
- Month 6: Analyze user data and feedback to optimize the platform and product offerings.
- Month 12: Expand product offerings and partnerships to reach a wider range of experiences.
By implementing these recommendations and taking a strategic approach to its business, LivingSocial can overcome its challenges and become a leading platform for curated local experiences.
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Case Description
Tim O'Shaughnessy, the 29-year-old CEO of LivingSocial, is growing a revolutionary worldwide business of "daily deals"-in which retailers offer a heavily-discounted product or service available for purchase for brief (often 24-hour) windows. The case explores the complicated sharing of risks and rewards between LivingSocial, participating retailers, and customers, focusing on the return on investment in both the short- and longer-term for LivingSocial's retail partners. In addition, given the rapid growth of the daily deals space and the accompanying proliferation of competitors including Groupon and Amazon.com, the case focuses on the need for constant innovation in product offerings to maintain differentiation from copycats.
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