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Industry and Competitor Analysis of Australian Group Buying Sites

Extracts from this document...

Introduction

Report Industry & Competitor Analysis for Group Buying Industry in Australia Marketing Strategy (MKT 540) Zaved Mannan D-6 Tower Bhaban, Fuller Road Dhaka University Campus Dhaka 1000 Bangladesh Student ID: 11320053 Date: 21.12.2011 Charles Sturt University Australia Executive Summery Group Buying (GB) industry is currently the fastest growing sector in Australia. It was established in 2010 and generated AUD$ 63m in the same year. The top eight GB sites (Jump on it, Scoopon, Stradeals, Spreets, Cudo, Deals.com.au, Our Deal and Ouffer) continued to hold 90% of total market share in the third quarter of 2011. Australian GB market generated aggregate AUD $64.6m revenue in the months of August and September 2011. Jump on it (a site of Livingsocial) is currently Australia's top GB site holding 29% market share. Scoopon holds second position with 20% market share and Spreets holds third position with 15% market share. GB market has low barriers to entry while the cost to scale the business is substantial. Australia is politically stable and does not have any significant history of expropriation or interference with foreign investor. Thus 'Google Offers' will have a safe political environment to run the business in Australia. In Australia, GB companies require to comply with laws and regulations that protect consumer rights and maintain market efficiencies. GB sites are required to follow Australian group buying code of conduct which was released on 2nd November 2011. Some economic factors are in favor of Google Offers to start business in Australia. Starting a business in Australia is much easier than any other countries in terms of procedure, time, cost or paid-in minimum capital required. The combinations of cultural and technological factors make Australia as an attractive location for online group buying business. Google Offers is currently being trialed in few cities of USA. There is no confirmed date when Google Offers will enter in Australia. In terms of market share, Jump on it holds top position, Scoopon holds second position and Spreets holds third position in GB industry. ...read more.

Middle

2.4.1 Political and Legal Factors Australia uses a parliamentary system of government with Queen Elizabeth II who lives in the United Kingdom and is represented by the Governor-General at the federal level and by the Governor at the state level. Julia Gillard who was able to form a minority Labor government with the support of Independents in June 2010 is the current Prime Minister of Australia (Australia). Overall Australia is politically stable and does not have any significant history of expropriation or interference with foreign investor. Thus 'Google Offers' will have a safe political environment to run the business in Australia. In Australia, GB companies require to comply with laws and regulations that protect consumer rights and maintain market efficiencies. The Competition and Consumer Act 2010 (CCA) protects the welfare of Australians through the promotion of competition and fair trading (Competition and Consumer Act 2010). Australian Competition and Consumer Commission (ACCC) and the Office of Fair Trading provide guidelines regarding legal aspects of advertising on the internet and dealing with disadvantaged or vulnerable consumers (Fair Trading). GB sites are required to follow Australian group buying code of conduct which was released on 2nd November 2011. According to the code of conduct all GB sites must comply with CCA 2010, the Privacy Act 1988 and the Spam Act 2003 (Australian Group Buying Code of Conduct). 2.4.2 Economic Factors The Australian economic growth has been positive since the beginning of 2011. Income may fall and consumer confidence in products may decrease in the periods of positive growth. These factors may help 'Google Offers' to make profit. Although income levels remained stable, but price levels have been on the increase. Therefore purchasing power has been declined in 2011. This factor is in favor of 'Google Offers'. Consumers will be motivated more in heavily discounted daily deals (Economic profile). The following economic factors will drive consumers for heavily discounted daily deals (Australia Economy 2011): * GDP : AUD$ 889.6 billion (2010) * GDP - Growth rate: 3.3% (2010) ...read more.

Conclusion

Google Offers must act carefully about deal personalization, execution, design, brand, operations, logistics, flexibility and adaptability to gain competitive advantage in Australian market. Google's competitive advantage is not the users, but the fact that they execute better than anyone else in the space and have leaders with a deep understanding of the customer. 3.5. Critical Success Factors for Firms for Succeeding in GB Industry * The first factor is surviving in a saturated market. * Product differentiation is must to gain distinct competitive advantage. Cudo follows differentiation strategy (The Group Buying Craze Down Under). * Product exclusivity is an important factor for a steady flow of good quality deals (The Group Buying Craze Down Under). * GB site can consider to extend deal offer time to keep users engaged (The Group Buying Craze Down Under). * GB site must consult with each business and ensure that they are not overexposed through email and ad network promotions (What does Google Offers mean for other group buying sites?). * GB site should 'partner' the merchant over the long term. Understanding their overall business is crucial. GB site should walk through the promotion with merchant, from start to finish. * GB site should educate both merchants and consumer about daily deal consistently. They must know how Deal exactly works. No one should assume that 'Daily Deal' concept is old news. * Promotions can go wrong and good merchant servicing can quickly address issues during the promotion to avoid disasters (What does Google Offers mean for other group buying sites?). Conclusion Group Buying industry is one of the fastest growing sector in Australia with high turnover and the growth rate of 72% very quarter. Top industry players, such as, Livingsocial, Groupon Australia, Spreets, or Scoopon holds 90% of the market share. This report has critically explained industry trends, structure and attractiveness. It also examined some political and legal issues, cultural and social factors and technological variables that might affect Google Offers when they start business in Australia. The report observed both current and prospective competitors of Google Offers as well as indirect forms of competition. ...read more.

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