eBusiness Strategy & Development: Assignment 2

e-Business Model and Strategy Business

Group 11 BEN MOHAMED Salim HUMBLET Michael OLIVEIRA Pedro OTERO TORRES Pablo PEREZ CARPIO Borja RADZKI Przemyslaw Pavel RIFAYI Melaz VERSTRAETEN Eloy VULFS Raphael

Academic year 2010/2011

In North America. Key Functionalities a) Communication functionalities On the website of Groupon. To buy something on the website a certain number of people has to sign up for the offer which is presented on the website. posting. e) Security functionalities Groupon takes security seriously and take numerous precautions to protect the security of Personally Identifiable Information. Any violation of this policy may lead to a copyright. A major drawback of the website is the fact that it is easy to imitate. font and logo. Personally Identifiable Information on the customers resides on a secure server that only selected 2 . Inc. The information about theses events are naturally available on the website. They can pay with their credit cards and security is guaranteed. Consequently. On the website. concerning its communication. trademark or other intellectual property right infringement that would expose the User to civil and/or criminal penalties. the costumers send the offer to their friends. or used with express permission of the copyright and/or trademark owner. we will not find any links to other similar companies. deep linking. the price after the discount. all buyers who have emerged get the product. linking. its regular price. festivals and music concerts. The success of Groupon. This password is encrypted. is directly associated with its business. In order to get the product they want to purchase. The costumers can also follow the group on the various websites of social networks such as Twitter and Facebook. distributing. That way the costumers promote indirectly the website of Groupon. d) Copyright functionalities Everything located on the website is the exclusive property of Groupon. transmitting. the discount offered by the supplier. The offer states: a detailed description of the product which is offered. The offer shows a product with a discount from 50 to 90%. In addition. if the minimum is not reached. Inc. The offer is posted on the website of Groupon and is send by e-mail to all the members who have registered on this site. theatres. the buyers also can get acquainted with the method of payment. If the minimum number of purchases is reached. The customers can access their Personally Identifiable Information on the Website through a password and their email address. there are 200 sites similar to Groupon some copying the look of its site. That’s why the company doesn’t want to promote others websites. no one gets the product. saving realised on the product and the minimum number of products which has to be purchased so that that deal could be concluded. operas. is strictly prohibited.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 1. c) Cultural functionalities On the website of Groupon. or otherwise modifying of the site without the express written permission of Groupon. b) Commercial functionalities Groupon displays an offer of products a day in each market it serves. the costumers can find and buy all kind of tickets which give them access to different cinemas. any coping.

Groupon’s business key success has been its strong partnership that it creates with local businesses.scribd. They encrypt certain sensitive information (such as credit card information) using Secure Socket Layer (SSL) technology to ensure that Personally Identifiable Information is safe. consequently. Groupon enters new markets by looking for the local market and identifying successful local businesses. Coupons. Estimated 11. Groupon offers considerable savings to consumers (up to 70%) who can then discover services/product they didn’t know.com. estimated $920M in revenue in 2011. Facebook Deals. Number of unique visitors per month Nearly 11. 3. NEXTUP. Yelp. GiltCity. Cheaptoday.2M unique visitors a month in the US in 2010. adresse URL: http://www. The key business characteristics Revenue Over $ 600M in 2010. Market shares Support team More than 3100 employees. Kupikupon. The target group1 Groupon offers a « Deal of the Day » in each of the 300 local markets. it guarantees revenue and large number of new customers for local businesses. Woot!.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 personnel and contractors have access to. Estimated 60% of Local Deals Market. Google offers. Number of subscribers Number of active users Competitors LivingSocial. in Sharepost. ideeli.com/doc/48117058/Sharespost-Groupon-Research-Report (page viewed the 20th of March 2011) 1 3 . Nextup Research Report.2M in 2010. 2. Groupon sales personnel then approach local businesses and try to establish partnership with the local business. Over 50M total subscribers across over 300 cities in more than 40 countries.

4. Groupon pays the local businesses after taking a 40%-50% share of the revenue generated by the deal. Groupon performs research of the local market and identifies the successful local businesses. There are about 500 firms worldwide (200 firms in US alone) which have started to emulate Groupon’s success. Groupon sales personnel approach local businesses with outstanding reviews. Consumers then redeem coupons with local businesses and receive discounts. barriers to entry for the local deal market and switching costs for consumers and local businesses are low. the deal becomes active. Groupon features deals involving products/services offered by local businesses in some selected locales based on the target consumer base. When a minimum number of users subscribe to the deal. Source: Company Reports & Primitus 4 . Consumers pay Groupon by purchasing the deal. Groupon is also best suited for businesses thriving on repeat customers such as spas and restaurants.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 Groupon is best suited for high fixed cost businesses and business where the customer acquisition cost is very high. The deal is generally available for a few days and the deal becomes inactive if the critical subscription is not reached. Consumers can also see deals in the Groupon website. Consumers subscribe with Groupon and receive deals through emails. and establish partnership with the local business. Business model Groupon’s business model is easy to copy.

Groupon is a platform offering promotional geo located products and services. making unrealistic promises (false advertising). Target customer: Originally Groupon had young women as main target. Groupon’s reputation has grown rapidly. Capabilities: The Groupon system has no limits: it does not need space to store goods and deals may be concluded with suppliers of all types of products and services. Indeed. mails to customers Customer Segments: Mass Market Cost Structure: Point-of-sale structure through the internet Revenues Streams: If enough customers enter into a deal 6. Key Partners: The Point platform (even though now Groupon acts independently) Key Activities: Offers discounts on various products and services from other companies Key Resources: Physical: Internet. The word Groupon is now a familiar name associated to “cuts” or “good deals”.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 5. The four pillars of the business model a) Product innovation Groupon doesn’t distinguish itself from competitors by its products but rather by the manner with which it sells its products and services. hence the offer more focused on health and beauty. servers . and the economic concept surrounding its creation. In addition. Value proposition: The big advantage is that Groupon only makes promotional offers for which the price decreases from 50 to 90% overall. ordinary people but also companies for example. Feel & Serve: Groupon run its activities and offers its services only through its website. All types of products and services are thus sold by Groupon. Thus its business model intends to reach as much people as possible. Intellectual: brand name Value Propositions (Offer): Promotes products or services with significantly discounted prices Customer Relationships: Self-Service : customers has the liberty to choose the product or service that suits his needs Channels: Website. Groupon committed to providing a "good deal" by city and by day. the frequency of of the offers makes the site very attractive. Here. However. In addition to that. Business model canvas The features of Groupon’s ebusiness canvas will be dealt with extensively in the following sections. advertising outside of the site is also aggressive. Trust & Loyalty: Given the deals offered by the site. Indeed. Groupon has expanded its offer. 5 . we just offer some key information. b) Customer relationship Information strategy: The platform provides no information unless you gave your e-mail address: it's an aggressive recruiting strategy.

The commissions depend on the discounted deal prices and the deal categories of the offers. Groupon can reach this objective by increasing the number of subscribers and the numbers of partnerships with small businesses by exploring new markets such as China. Ownership of the resources Relationship Data Transaction • • • • • Groupon The businesses Groupon The businesses Groupon 6 . 7. Resources: The main resources of Groupon are its 3100 employees and the computers and the locals and its reputation. A new offer can be started for free. Financials Revenue Model: Groupon earnings come by keeping approximately half the money the person pays for the coupon. when a deal is reached. the company uses social marketing sites such as Facebook and Twitter. Cost structure: The costs consist mainly in the exploration of business with outstanding reviews and the promotional costs. the company has developed partnerships with several companies in order to provide a range of services to the merchants who choose to advertise Groupon Deals such as “TransNational” (payment processing) and “Speakeasy” (voice and data communications). Besides. the company’s growth depends essentially on the number of deals. a commission of 30% (on deals promoted by Groupon) or 10% (on deals promoted by the merchants themselves) is charged by Groupon. Nevertheless. In 2009. Groupon has developed an e-commerce platform: Groupon Store.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 c) Infrastructure Management Activity configuration: Groupon firstly sends employees to research the local market and find a business with outstanding reviews. Profit Model: Since the system of commission represents the major part of the incomes of Groupon. The revenues in 2010 were $600M and the estimated revenue in 2010 will achieve $920M. Then. Nowadays. Their promotional texts contribute to the popularity of the site. Partner network: The number of subscribers has continuously increased since the creation of the website. the site has more than 50M total subscribers in more the 40 countries worldwide. but also promotes through applications on iPhone and Android-based mobiles to promote the idea.

money The businesses data about products. but only once a "tipping point" of people agree to participate. The partners and the allies The first Partner Groupon needed was the platform The Point from where it expanded.com 7 . In this way.groupon. “It’s a website that lets you start a campaign asking people to do something as a group. personal data’s Groupon data about the customers. services and prices Customers Businesses products and services Customers vouchers’ Businesses 9. products and value streams Goupon Groupon vouchers.”2 Secondly. the companies contracting with Groupon are the first complementors and the ones being in contact with the clients. the groupon and the deal goes through if the minimum has been sold at the end time. Groupon couldn’t live without other partners and allies that are the merchants contracting with them and the subscribers being the customers. special discounts Customers money. the supplier and Groupon agree on a win-win deal where the price will be lowered according to a minimum quantity sold. 2 Website: www. or not.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 8. Diagram of the information. Together. Daily subscribers will buy. The supplementors are the competitors that are copying on Groupon’s business model and developing the same business. The company Groupon takes 50% of the final price and the customer is delivered through the supplier if necessary.

the products sold are not basis products where the margin is low. but rather luxury products. distributing the final price equally between the company Groupon and the product supplier. discounts and packages. the supplier is able to calculate a potential benefit out of the deal. c) Market segments The following graphs offer statistics regarding the subscribers: they are mostly young single women that are educated and work for good revenues. b) The added value of the online business The added value that is brought by the company is mostly the security. new businesses products that need to be known.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 10. Overview of Groupon’s e-Business strategy a) Value proposition Groupon promises to lower market product prices from 50 to 90%. Indeed. Therefore. 8 . That way. the contracted deal is only executed if the minimum quantity is met.

the channels used to reach the clients are characterized by both a substitution effect and an extension effect.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 On the other side. d) Channels On the first hand. Groupon is looking for companies that are willing to be known and to expand or the ones willing to develop internationally. but moreover. Simultaneously. e) Activities to perform Groupon needs to reach its subscribers and attract new ones in order to raise a minimum amount of customers interested in the same product. buying through Internet is a new way to make his shopping. Groupon started its business thanks to the platform The Point as launcher of websites that allow 9 . the Groupon offers allow discounts and less travelling. On the other hand. etc. the businesses are contacting Groupon to work with the company and are helped to clinch a deal. f) Resources. The delivery is executed by and in charge of the supplier.. it needs to perform well in order to have recognition and respect from contracting companies and attract new ones. technology. Indeed.

To Groupon or Not to Groupon: The Profitability of Deep Discounts. half of it is returned to the company Groupon. Groupon is the largest player in the emerging local deals market with more than 60% of the shares. Yelp. BuyWithMe and Yelp. Interenter Retailer. Among them. 2010.pdf (viewed the 3rd of April 2011) 4 Deatsch. in order to dismiss the rivals.. Jasmere. Cost structure EDELMAN. i) Revenue sources From the price charged to the subscribers for the voucher. BuyWithMe. Groop Swoop. Lots of other companies have also worked with Groupon and most of them are quite satisfied with the services of Groupon even though there are more and more studies that nuance this affirmation3. S. We note that there is a significant competition from LivingSocial that has raised funds and is likely to expand. The other players are LivingSocial. adresse URL: http://www. Groupon launches features to keep merchants happy and away from rivals. & DUKE KOMINERS. it is now independent. February 2011. in Harvard Business School.com. K.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 gathering people searching for the same project or product. 3 10 . The company has more than 50 million subscribers spread in 300 cities worldwide. & JAFFE. g) Partners The partners. TownHog.edu/research/pdf/11-063. Groupon has created the “Groupon Merchant Partner program that guarantees businesses a certain number of voucher slots per year if they agree not to work with Groupon competitors. and eWinWin. j) Pricing strategy Groupon has as strategy. Ideeli. the heaviest competitor is LivingSocial followed by Coupons. h) Competitor The business model of the company Groupon is a weak point for the company since it can be easily copied. Coupons. many companies are using the Groupon model to launch a business.. However Groupon was a side project of The Point at the beginning. Therefore. to reduce the market price at least by half in order to attract the customers on the different groupons.”4 k) Conclusion In order to conclude. Ideeli.hbs. S. B. 11. are very diversified going from the cloths brand GAP to the events NHL and NBA and the digital payment platform MASTERCARD. being essentially the companies co-contracting. Moreover.

Companies looking to lose money in order to convert customers into regular paying customers. 2. Now in order to reach that conclusion. If you take a look at the revenues of typical local advertisers it consists of car dealers. chain restaurants. It has been written that Groupon has cracked the local problem – and that all of the $100B per year or more that is spent locally is open to them. Businesses willing to spend money to acquire users. My guess is that Groupon is doing $1B in revenue – $500M in Cost of Good Sold. there is thus not a mass of cutting-edge technology required nor tremendous database necessities or server needs – one can assume that the cost structure is not going to get too far beyond the SGA line. The overhead is completely fixed and you are paying the workers to be there – so incremental margins are high. They pay out 50% of that to their partners who offer the discounts – and the remainder of the company cost is in sales. etc… What you realize looking at the list is that most of these businesses operate in extremely competitive environments with margins that are razor thin at best. Companies with extremely fixed costs. high marginal profit levels. Perhaps. who can afford to offer 75% off on a regular basis? The answer falls into two buckets: 1. I am offering a 50% discount generally – and Groupon is taking 50% of the offer price – so in essence. the cost of ramping up ahead of revenue etc…) – for a total of $250M in EBITDA. Car dealers are in no position to use Groupon – nor are clothing stores. In most media businesses this is called SAC (subscriber acquisition costs) or CPGA (cost per gross add). electronics chains. but I think it is instructive to disaggregate that market a little bit and see just who is using Groupon. supermarkets. bars and grills. Since most of the Groupon employees are either sellers or administrative people doing the “paper work” for the deals. You can imagine that the margins on cupcakes are very high. retail stores. As a store owner – if I choose to use Groupon. my net is 25% of the retail price. Now let’s look at the local advertising market. supermarkets etc… The margins for these businesses are too low – and they already spend a lot of marketing dollars branding themselves. you also have to believe that Groupon will continue to take an increasing share of the local advertising market – particularly the promotional budgets and marketing budgets of the local advertisers. So Google offers $6B for $250M in EBITDA – 24X which seems like a large number – but if EBITDA is scalable and growing extremely fast (over 100% per year right now) – then the 24X becomes 12X in a year and 6X in 2 years – which seems like a pretty good deal for Google – and is probably one of the reasons why Groupon decided to remain private. $200M in SGA and perhaps another $50M in miscellaneous costs (real estate – exec salaries. electronics chains. The question is. The issue with these costs are that you have to know very well what the lifetime value of the customer is in order to price these properly. Now their business model is based on simplicity. 11 . Say you own a spa. perishable inventory and incremental capacity.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 Groupon has about $1B in revenue. If you look at a typical media company at scale – they tend to run about 20% of sales as costs (incremental margins on the extra $ of revenue is over 80% often) – so on $1B of revenue you have $200M of costs.

But. Michael Porter’s five forces model Michael Porter’s 5 competitive forces model is the basis of modern business strategy. So. this principle does apply even though in a slightly different way. Unless the entry of new firms can be blocked by incumbents. Entry of larger players such as Facebook (Facebook Deals) and Google (Google Offers) could also pose significant competition to Groupon in the future. Groupon and LivingSocial. if the product is a buffet lunch. This results in many new entrants. Google prepares a new product to help potential customers find big deals in the area where they live. The threat of the entry of new competitors Profitable markets that yield high returns will attract new firms. It goes without saying that a business engages in promotions if it provides some significant long-term benefit. what if a promotion does not provide any significant benefit? A good example is businesses teaming up with popular coupon sites like Groupon or Living Social to drive store traffic via discount coupons. 12. Here’s what a business should consider before going with Groupon: Let’s assume that the business in question – a restaurant – offers a Sunday brunch for $16. the abnormal profit rate will fall towards zero. It offers the deal of the day.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 The Cost (Loss-making) Mechanics of Groupon Promotions cost money. Google Offers follows the same mechanics that the two main representatives of the segment. you have to allocate the costs of all the above to determine profitability. The competitive strategy should be based on a strong understanding of the industry structure and how it may possibly change. which eventually will decrease profitability for all firms in the industry. sending a daily email". and if it meets the number of 12 . This model is based on the principle that a corporate strategy should take into account the opportunities and threats in the external environment that the organization operates in. In the online world. If they partner with Groupon. the deal would have to be priced at $8. Sale price of Promoted Product: $8 ($16 Sunday brunch on sale for $8 through Groupon) Product costs: • • • • • • • • Raw Materials Labor Packaging Promotional expenses Insurance Rent Utilities Delivery One way of pricing this is to take all the costs into consideration and apportion them to the overall sales of the promoted product within the portfolio.

The intensity of competitive rivalry For most industries. dwarfing the other players. Groupon is the largest player in the emerging local deals market. an even bigger player than Groupon. LivingSocial is a strong number two in the local deals market after Groupon. Groupon faces competition from LivingSocial which is rapidly expanding to all cities in which Groupon is offering deals. LivingSocial's social applications enable more than 85M users to catalog.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 people who accepted the offer. form groups. LivingSocial offers deals in more than 127 markets and four countries. Worldwide. Save to card offers and local coupons. LivingSocial is a social discovery and cataloging network that connects users with their interests. review. The Company's marketing technology solutions have helped top brands and retailers reach consumers on thousands of Web sites with alternatives to offline-delivered coupons. Yelp also offers its users social networking features such as the ability for users to add friends. Coupon Codes are available for diverse product categories. The threat of substitute products or services 13 . Coupons.com is the largest printable coupon Website on the Internet.4B in 2009. in our estimate. in December 2010 LivingSocial has been the most serious competitor. Moreover.6B in 2010 up from $22. share and buy their favorite items. there are over 500 similar sites including over 200 in US. the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. Yelp is a local review website where users can write and read reviews on various categories. participate in discussion forums. We estimate that the US Online spending (on which local deals market is dependent) is likely to edge up to $23. Google tried to buy Groupon by $ 6 billion to strengthen its local advertising business. Coupons: Founded in 1998. providing clients with a solution to coupon based promotions and consumer services. with more than 60% share. Coupons is a leader in interactive coupon solutions. The company has more than over 50M total subscribers and offers deals in more than 300 cities worldwide. it is specific and can enjoy the discount. Yelp: Launched in October 2004 by former employees of PayPal. and in some regional markets. which has started offering deals. LivingSocial: Founded in 2007. Groupon rejected the offer and is instead preparing to launch an IPO (Initial Public Offering) worth $ 15 billion. Users can save money by using options such as printable coupons. Groupon could also face competition from players in the local review & search space such as Yelp. arrange and conduct events.

or. This is not the case with Groupon. Finally Groupon only sells his products (offers) when a fixed number of customers is going to buy it. it means that Groupon can remove the offers if there is not the minimum number of buyers. e. when there are few substitutes. Yelp…and many others). Also we can mention that the buyers groups are not concentrated. In this case. As a conclusion it is clear that Groupon customers don’t have a big negotiation power. There exist in the global market many competitors that develop offers so similar to Groupon products. so they are less sensible to the price changes. Suppliers of raw materials. labor. may charge excessively high prices for unique resources.. Groupon suppliers market is dominated by numerous companies (services. that want to make Corporate Social Responsibility.g. Groupon´s provider market is formed by a huge amount of companies that work in different markets. The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure. we can conclude that Groupon´s suppliers are not a powerful group as customers are. this feature facilitates the search for substitute to Groupon and supplier switch. Moreover. components. The latest initiative related by the webs sites in the U. Suppliers may refuse to work with the firm. which also affects the customer's sensitivity to price changes. and services (such as expertise) to the firm can be a source of power over the firm. We can say that a group of customers is powerful when it buys a large volume of products. This proposal called Green Box Top. It is also a highly diversified market and there are no labor unions between suppliers making this group less powerful at negotiating time. 14 . LivingSocial. because there are millions of Groupon customers in the world that only buy a small quantity of offers. The bargaining power of suppliers is also described as the market of inputs. as it is mentioned in the last paragraph (Coupon. products…ets) and is much less concentrated than the industry it sells. The companies wishing to participate in these promotions will have to answer "The Green Story” criterion. The bargaining power of suppliers. Green Box Top was born in August 2010 and it allocates part of the profits made by selling the coupons or offers a social cause.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 The existence of products outside of realm of the common product boundaries increases the propensity of customers to switch to alternatives. From the fact that Groupon´s providers can be changed anytime.S. the products bought by customers are not an important part of their expenditures.

Groupon Moves Into TV Land.. & JAFFE. 2010 The Wall Street Journal.allfacebook. August 19. 2010 The Wall Street Journal. October 26. 2010 Chicago Magazine. Does Deals With Top Chefs. Surprising Ways to Save Money. 2010 CNN. Meet the Fastest Growing Company Ever. February 2011.linkedin. Aug 20. 2011 EDELMAN. August 16. Detailed bibliography Articles Forbes Magazine. 2010 Webography http://en. Interenter Retailer. January 2. On Groupon and its founder. B. September 16. August 30. Groupon launches features to keep merchants happy and away from rivals. Man tries living on coupons for a year. December 17.grouponworks. August 12. Of bits and bites. 2010 CNBC. August 2010 Inc. Nextup Research Report.groupon. 2010 Deatsch.com/blackboard/groupon Statistics http://statistics. S. .com/developers/single/groupon/8878/c http://www. Groupon: Fastest Growing Company Ever?.com/company/groupon/statistics 15 . 2010 NEXTUP. & DUKE KOMINERS.org/wiki/Groupon http://www.com/learn http://www. Andrew Mason. Videos CBS News. in Harvard Business School. Groupon Goes National With Gap Deal. K. 2010 The economist. October 22.com/ http://www.com/company/groupon http://www. 2010.businessinsider.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 13.crunchbase.. To Groupon or Not to Groupon: The Profitability of Deep Discounts. August 4. Los Angels Times. 'Daily deals' sites turn discounts into a social media phenomenon.wikipedia. Groupon And The Clone Wars. S.

500. etc) What other financial impact will the promotion have on your brand .00% $20.48 $0.67 $5.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 14.00 $18. Appendix APPENDIX A: Example of the ROI and profits on the operations of Groupon Description What is the face value of the certificate? How much will someone spend to buy the certificate? What % of paid money will GroupOn get? What is your normal margin? If a $30 purchase costs you $10.52 Total Long Term Profit ROI $13.33 130. recurrning customers do you expect to attract from the campaign.00 16 . you have a 200% margin ($30$10)/$10 Factor Offer Amount (O) Sell Amount (S) GroupOn's Cut (G) Value $20. expressed as a % of total certificates sold? How much will a typical customer spend with you over their lifetime (or year/month.00 $0.048.616.00% 1.00 $6.883.00% Margin (M) 230.00 $0.568.00 $10.00 Income from Investment Initial Offer Income Income from sells beyond Certificate Offer Amount New Patron Long Time Income Brand Benefit Income $24.375.00 $5.77% CALCULATION BREAKDOWN (FYI) Cost of Investment COGS COGS for ticket beyond certificate amount COGS lifelong purchase cost Brand Damage Cost $10. revenue effects tied to brand value and purchases with certificate) ROI over the "Long Time" Period Campaign Profit $1.225 What is the average amount a customer spends on a purchase using the certificate? Certificate Average Ticket (A) What % of the certificates do you expect to be redeemed? How many certificates do you expect to sell? How many new.00 Profit from purchases w/ certificate Long term Profits (includes growth of customer base.00 50.00 $0.positively or negatively? Redeemed Ticket % (R) Total Sold (T) New Patron % (N) New Patron Long Time Income (L) Brand Value (V) RESULTS 75.125.18 $0.00 68.076.00% $20.

ICHEC Jean-Dominique Seroen APPENDIX B: Company Timeline eBusiness assignment 2 3rd of April 2010 Group 11 17 .

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