The Competition Between LivingSocial and Groupon

LivingSocial

LivingSocial is an online marketplace that allows its users to buy and share things to do in their city. In 2013 LivingSocial has about 70 million members around the world. Tim O’Shaughnessy, LivingSocial CEO, said that”We’re the connection tissue between merchants and customers, and that manifests itself in different ways. We think we can redefine how people are interacting with another.”

One of the four cofounders of the company, O’Shaughnessy graduated from Georgetown University’s McDonough School of Business in 2014 and joined Revolution Health afterward. He left Revolution Health in 2007 and started a new business, “Hungry Machine”, which is a popular viral app name “Visual Bookshelf” that allowed users to share book reviews with friends. Due to the success of “Visual Bookshelf”, O’Shaughnessy saw the opportunity of leveraging user data.

Groupon

Groupon is a Chicago-based group buying website that offers daily deep-discount deals to local business. Andrew Mason started Groupon in Chicago in November 2008, which was nine months ahead LivingSocial. It was the fastest company in history to reach $500 million in annual sales. Groupon grew from 140 employees in 2009 to more than 7,000 in spring 2011 and could rely on more than $950 million in private equity financing.

Editor’s Note:

Groupon and LivingSocial have similar websites, and allied deal prices. Groupon CEO Andrew Mason recently said on CNBC that his company was “many many multiples” bigger than its nearest competitor. He claimed that he was very confident that Groupon was generating “more than 3” times as much revenue as LivingSocial.

The graph below shows that for both companies the largest section of their members are 34-44 years old. However, Groupon has advantage over LivingSocial among younger customers from 12-17, 18-24, and 25-34. I think the future opportunity for LivingSocial is to increase awareness among young people. In order to achieve that LivingSocial has to communicate with young people on platforms where they are active and in the way that they prefer.

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The Weather Company Case Study

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“Digital and specialized business information products, not television, are two of the biggest drivers of growth for The Weather Company, parent of The Weather Channel. Today, b-to-b products represent 10 percent of revenue. In the next three years, that percentage will double, thanks to big data and the ability to integrate into customer workflows.” -The Weather Company COO, Chris Walters

The Weather Company was the most widely known name in the weather business. Founded in 1982 with its roots in cable TV, TWC is now facing the challenge of transitioning from traditional TV to digital.

TWC has two revenue streams. The first one was advertising revenue from consumer ads displayed along TWC’s weather data, no matter on TV, its website, or its mobile app. The second was the weather data and the expert analysis it marketed to corporate clients. For example, Home Depot and American Airlines incorporated weather data into their buying decisions so they could more accurately predict what products or services would be needed and where.

In order to shift to mobile, TWC’s Digital Division decided to utilize the company’s big data to acquire new customers and deepen the relationship with existing customers.

The running app market was highly competitive. TWC’s app, OutSider, aimed to provide both weather data and motivation to runners. “OutSider provided accurate and real-time weather forecast, allowing users to plan better-when to run, what to wear, and how to hydrate.” In addition, their competitors like Runtastic did not provide highly accurate detailed weather forecast like OutSider did.

Editor’s Note:

The TWC case is a great example of a company’s renovation on leveraging big data. The success of TWC could be attributed to the company’s big data platform and processes. Another crucial reason was visionary leadership. The leader of the company was able to predict a future trend and pursue it to develop new market. In today’s world, we can all learn a lesson here from TWC’s vision and renovation.

Despite the good start, TWC was facing key challenges ahead. One of them being how would TWC be able to maintain its competitive advantage with its weather-centric running app. As well as location and weather, what other data could TWC incorporate into the OutSider app to make it the go-to running app and a source of premium advertising revenue? I believe that TWC’s strength over its competitors is professional weather data and weather forecasts, therefore as long as they leverage their unique service and concentrate on that they will be able to maintain leader in the industry.

L’Oreal Case Study – Distinguishing Fads and Trends

“Having seen the innovative campaigns that competitors and other industries had implemented, she was convinced that social media could be a game-changer in the hair colour market.” 

The case discusses an innovative social media strategy by L’Oréal Paris, which is to ‘listen’ to consumers and then create product to meet consumers’ requirements and needs. First, the company utilizes Google to track emerging styles and decide which style will stay in a long term. Then it uses social media in choosing where to place the product, how to release it and the name of it.

One of the biggest challenges of the beauty and fashion industry is to distinguish fads from trends.

Fads are style that rise quickly in popularity and then burn out, usually within a year.

Trends last longer – over time they may become “classics”.

Marketing teams in cosmetics often ask four questions:

  1. Is the item/style compatible with a change in consumer lifestyle?
  2. Does the innovation provide real benefits?
  3. Is the innovation compatible with other changes in the marketplace?
  4. Who is adopting the trend?

If the answer to all the questions above indicates an innovation or style that has enduring qualities, it may be a trend instead of a fad.

For example, Harem pants (as seen in image below) were first seen by millions on M.C. Hammer in 1990, and again on Justin Bieber in 2013. In 1990, the style was welcomed by regular consumers quickly because the pants were comfortable and inexpensive. However, it turned out to be a fad because they were inappropriate in professional environment and were not very flattering.

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Editor’s Note:

In today’s world companies are able to obtain loads of information and data from social media. However, companies have to distinguish fads and trends to make a marketing decision rationally. It is also crucial how they integrated social media into the marketing strategy. It needs to include how to deliver the product to consumers, how it should be branded and named, the price point, and how it would be communicated to consumers. Social media like Facebook became a platform that brands adapt to “push” their new products to consumers. For example, Dior’s Facebook page incorporated beautiful photography as well as information about new products. WIth 12 million likes in 2011, Dior consumers interact with the brand on the social platform.

Case: OMBRE, TIE-DYE, SPLAT HAIR: TRENDS OR FADS?: ‘PULL’ AND ‘PUSH’ SOCIAL MEDIA STRATEGIES AT L’OREAL PARIS