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Introduction
Mr. Chang is the owner of Enter the Dragon, which is an upscale Asian restaurant
residing in the heart and soul of Chicago. Mr. Chang ended up being approached by a Groupon
sales representative who gave him many choices that gave Mr. Chang a lot to think about. Enter
the Dragon needs to look at marketing options and Groupon offered their services to help.
Groupon offered two promotional ideas to help. One was a daily deal specifically through
Groupon or a discount through Savored, which is their network site for making restaurant
reservations.
Now the daily bargain option would drive traffic, but it’s a hefty discount and could end
up hurting Enter the Dragon more than helping. Savored lets restaurants apply targeted discounts
during slow periods to try and sell empty tables. Finding the best marketing option to highlight
Enter the Dragon while managing to keep costs low is the focus of this case study. Sheth (2021)
brings up a great point when he says you can win customers over if you offer a superior product
at a reasonable price in a customer-friendly service.
The analysis includes all aspects that need to be considered? Should Mr. Chang do the
daily deal?
The daily deal would have customers saving $30 on a $60 meal deal at Enter the Dragon.
Where Groupons Savored would be used to make dinner reservations, resulting in a $15 profit
per Groupon. Armstrong & Chen (2020) state that most models of sales consumers care only
about the price level. Due to the analysis in the case study concerning a New York Times blog,
Mr. Chang will make a profit of $5 per table with Groupon. The facts to consider are that it costs
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$60 per table every time a Groupon consumer makes a reservation, and at the same time, it keeps
a customer who is willing to pay now from utilizing the table. So, the analysis doesn’t consider
customers who are considered regulars who don’t use Groupon, which could result in a loss of
$50 due to Groupon reservations. This does not include the number of regular customers as well.
Analyzing the demand of returning customers shows a normal distribution with an
average of 60 and a standard deviation of 30. When looking at the profit margin, Enter the
Dragon would be looking at a profit margin of $50 for the ten tables that can be reserved. While
the remaining 90 tables should bring in a profit of around $2,875. It’s noted that revenue will
decline with the implementation of Groupon, which mainly affects Enter the Dragon’s regular
customers. Even though Mr. Chang gets $5 for every table that uses a Groupon, if 50 tables use
Groupon, his total profits are only $567. The positive of Groupon is that it brought visibility and
plays as a supporting character for Enter the Dragon. Analyzing the data further goes to show
that there is an average of 7.6 empty tables when 50 tables are using Groupon. But on the flip
side, when Groupon isn’t used, there are 41.3 vacant tables. Mr. Chang has a tough decision to
make where he needs to decide if the visibility is worth it going off hopes that it will lead to
higher profits or investing in other marketing strategies that could be more rewarding.
The ability to limit the number of tables at a discount, does it have any advantages?
Now, looking at Groupon’s Savored option might be the option that would be more
beneficial for Mr. Chang’s situation. Savored gives Enter the Dragon the ability to limit the
number of tables to be reserved which could be promoted at a lower price. Mr. Chang would
have to use the data, to see what number of tables to be able to be reserved would make him
profitable and adjust based on demand. Mr. Chang has to focus on maximizing profits by
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utilizing Savored to his advantage and using it for peak times to attract higher profit margins on
reserved tables. Savored is more enticing for Mr. Chang due to him not having to give such a
huge discount, which will make it worth it to have more tables available for reservation.
Cao et al., (2018) state that consumers are more concerned about quality over excessive
discounts. Enter the Dragon needs to realize that they need to keep quality standards up
regardless of how busy they get because they can ultimately lose customers if their restaurant
quality goes down.
Would you prefer to use Savored or the daily deal? Why?
Expectations aren’t always what they seem, under certain circumstances, discounts could
lower purchase likelihood depending on the product or service (CAI et al., 2016). Looking at the
data in the case study, Savored seems like a better fit for Enter the Dragon, providing more
opportunities to adapt to demand. Mr. Chang has the ability with Savored to control the number
of tables he’s allotting to be reserved and can determine when it’s a good idea to do so or not. In
my opinion and according to the data provided this leads to increased earnings while attracting
more customers at the same time. The daily discount brings a risk of losing regular customers
and Mr. Chang doesn’t have as much control. The fact of getting to control the number of tables
allows Mr. Chang to make himself happy, his regular customers happy, and drive new business
all at the same time.
Conclusion
Analyzing the daily deal against Savored showed both positives and negatives for each
but Savored had more of an opportunity for Enter the Dragon to be successful. Savored favors
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their regular customers. Customer loyalty is the key to success where loyal customers are less
likely to go to a competitor regardless of price (Firdaus & Kanyan, 2014). Finding the best
marketing option to highlight Enter the Dragon while managing to keep costs was the goal of this
case study. The data shows Savored is what’s best for Mr. Chang’s business and will check all
the boxes he needs to check to stay competitive in a high-end Asian restaurant in Chicago. Mr.
Chang should choose Savored over the daily deal and focus efforts on tracking trends and
demand to manage his tables for reservations to get the most out of this marketing service.
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References
Armstrong, M., & Chen, Y. (2020). discount pricing. Economic Inquiry, 58(4), 1614- 1627.
https://doi.org/10.1111/ecin.12774
CAI, F., BAGCHI, R., & GAURI, D. K. (2016). Boomerang Effects of Low Price Discounts:
How Low Price Discounts Affect Purchase Propensity.The Journal of Consumer
Research,42(5), 804–816.Fhttps://doi.org/10.1093/jcr/ucv057
Cao, Z., Hui, K., & Xu, H. (2018). When Discounts Hurt Sales: The Case of Daily-Deal
Markets.Information Systems Research,29(3), 567–591.Fhttps://doi.org/10.1287/isre.2017.0772
Chopra, S. (2021). Supply chain management: strategy, planning, and operation (Vol. 7).
Pearson.
Firdaus, A., & Kanyan, A. (2014). Managing relationship marketing in the food service
industry.Marketing Intelligence & Planning,32(3), 293–310.Fhttps://doi.org/10.1108/MIP-10-
2012-0116
Sheth, J. (2021). New areas of research in marketing strategy, consumer behavior, and marketing
analytics: the future is bright. Journal of Marketing Theory and Practice,29(1), 3–
12. https://doi.org/10.1080/10696679.2020.1860679
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