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The Importance of User ExperienceYelp Inc.
Team 3Chia-Hsin, Fan(Carrie); Chun-Yu, Fan(Claudia);
Ittitep Tepkasetkul(Jim); Kanlayarat Santiwijit(Tipp); Nawaporn Chirananondh(Wow);
Pakanun Poolvoralaks(Ib); Pei-Jung Huang(Patti)
Dr. Barry Unger
4/17/2014
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services
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BackgroundBackground:• Founder: Jeremy Stoppelman and Russel Simmons in 2004
(ex-employees from PayPal)• Motivation: the perfect pizza (yellow page only have paid
ads)
IPO in 2012/3/2
Small group of contributors that Yelp “Take the lead”
Current situation & Dilemma: • Charging local businesses (current) vs. readers• They don’t know what they are
4/17/2014AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services
Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
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What is Yelp?
4/17/2014
What they think their product is
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
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Ideal Product
Generic Product
ExpectedProduct
Whole Product
For Business: messaging system, account managerFor Reader: Order Delivery, Deals & Coupon, Health ScoreSponsorship ProgramYelp AdsBanner AdsActivity Feed (Free)PlatformData (Click Rate, Review)
Community
Product Analysis
4/17/2014
What their product actually is
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
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Target Customer & Revenue Model
4/17/2014
Contributor
Readers(Community)
Local Business
Partner
ProductTarget Market
Revenue ModelSponsorship ProgramYelp AdsBanner Ads
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
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lege Expense Causes Loss
Expand new markets increases revenuebut also increase expense• Sales & Marketing costs 55%• Sales Staff’s commissionOnce achieve saturation point, Yelp will die.
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S&M55%
Expenses in 2013
Why Yelp isn’t profitable?
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
2010 2011 2012 2013
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RevenueExpensesNet Loss
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Threat:• Low-profitable
industry•Powerful substitutes
Opportunity:•Highly dependent
users(readers)
Existing Rivalry- User Review Site• High competition• Low-profitable (advertising
expense, sales force)• Keep changing revenue model
New Entrant- Info Media• Low entry barriers• Capital requirement
Potential Substitute- Social Network• Similar feature can easily replace• Large financial support• Large loyal community
Why Yelp isn’t profitable?
Winners must find theBlue Ocean to contain users
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
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Complaints about Yelp
4/17/2014AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services
Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
Why Yelp isn’t profitable?
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Losing Business ClientsYelp is useless due to neglect of user experience• Not enough local database to attract readers• Biased comments or fake reviews• Unfriendly user interface• Unprofessional interaction and communication• Poor customer services
New idea of product, “Filters”, but it’s overwhelming
“Old tech isn’t surpassed by disruptive tech but because the market demand” (Bower & Christensen, 1994)
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Why Yelp isn’t profitable?
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
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Prick the Bubble of Engineer (1/2)
4/17/2014
Tactics
Kick It (UI) Simple and Stupid• Website: make homepage simple and
focus on searching • Mobile: make it ease to share (i.e.
picture menu, restaurant atmosphere)Create “Pick for Me” (advising feature)• Randomly select three 4-stars-
restaurants by location
ExceptedProduct Platform
Strategy Enhance features
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
Recommendation
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Prick the Bubble of Engineer (2/2)
4/17/2014
Tactics
Click rate: “Activity Feed” (= Google Analytics)
Reviews: Filter by system and then monitor by user-support team • Fake: Delete biased reviews to maintain
reputation (= Google Scorecard)
• Negative: Consulting Program Accumulate more database
ExceptedProduct Data (Click Rate & Review)
Strategy Develop new business model
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
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Prick the Bubble of CEOReducing marketing expense• Suspend expanding international markets• Decrease budget on Elite program
Collect more user experience• Setup feedback feature on site• Encourage Yelper to give feedbacks• Fix the problems seriously
Develop new products• Host event advertising (i.e. restaurant week)• Create “Consulting Program”
Find a big brother: Sell to Facebook4/17/2014
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
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References• Darwell, B. (2013, 4 30). Facebook earnings preview: changes to ads, payments, gifts and other revenue streams in Q1. Retrieved 3 31, 2014, from
InsideFacebook: http://www.insidefacebook.com/2013/04/30/facebook-earnings-preview-changes-to-ads-payments-gifts-and-other-revenue-streams-in-q1/• Lardinois, F. (2012, 10 10). Shrink To Grow: Citysearch And Urbanspoon Parent Company CityGrid Lays Off 15% Of Its Employees. Retrieved 3 30,
2014, from TechCrunch: http://techcrunch.com/2012/10/10/shrink-to-grow-citysearch-and-urbanspoon-parent-company-citygrid-lays-off-15-of-its-employees/
• Piskorski, M. J., Chen, D., & Smith, A. (2013). Yelp. Boston: Harvard Business School.• Tsai, L. (2009, 12 9). Chowhound Comes of Age (For Better or Worse). Retrieved 3 31,2014, from East Bay Express:
http://www.eastbayexpress.com/oakland/chowhound-comes-of-age-for-better-or-worse/Content?oid=1524763&showFullText=true.html• Chris Silver Smith (2010). Is “Yellow Pages” Becoming An Obsolete Concept?. Retrieved 3 31, 2014 from
Searchengineland:http://searchengineland.com/is-yellow-pages-becoming-an-obsolete-concept-38752• Nick Stamoulis (2012). Why Yellow Pages Will Be Dead in Five Years. Retrived 3 31,2014 from searchenginejournal:
http://www.searchenginejournal.com/why-yellow-pages-will-be-dead-in-five-years/40008/• Rusell Perkin (2011). Rating the Zagat. http://infocommerce.typepad.com/my-blog/2011/09/rating-the-zagat-deal.html• Laurent Kirchner (2011). Zagat Remains a Profitable Brand. Retrieved 4 1, 2014, from
CJR:http://www.cjr.org/the_news_frontier/zagat_remains_a_profitable_bra.php?page=all• Tsuruoka, D. (2012, 07 24). TripAdvisor Q2 Sales Miss Analyst Views; Shares Down. Retrieved 4 1, 2014, from investors:
http://news.investors.com/technology/072412-619352-tripadvisor-second-quarter-sales-miss-estimates.htm?p=full• Trefis Team. (2013, 09 05). TripAdvisor Revised To $79: Advertising Business Has A Brighter Future. Retrieved 4 1, 2014, from Trefis:
http://www.trefis.com/stock/trip/articles/201440/tripadvisor-revised-to-79-advertising-business-has-a-brighter-future/2013-09-05• Bussgang, J. (2012, 08 17). Scaling is Hard, Case Study: TripAdvisor. Retrieved 4 1, 2014, from Inc: http://www.inc.com/jeff-bussgang/scaling-is-hard-
case-study-tripadvisor.html• SAUL HANSELL. (2008, 05 12). Why Yelp works. Retrieved 4 1,2014, from New york times.• Paula Forbes. (2013, 4 22). SF Restaurant Calls For Yelp Boycott: 'Stop the Bully’. Retrieved 4 1, 2014, from EATER.• Michael Luca. (2011, 9 16). Reviews, Reputation, and Revenue: The Case of Yelp.com. Retrieved 4 1,2014, from Harvard business school case study.• Sandy Banks. (2013, 4 22). Putting Yelp in their rear-review mirror. Retrieved 4 1,2014, from Los Angeles Times.• THE YETI. (2013, 10 29). 4 Reasons Why You Shouldn’t Trust Yelp Nightclub Reviews. Retrieved 4 1,2014, from THE YETI
4/17/2014AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services
Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp