Introduction
The success of any business depends on its pricing strategies, competitive environment, and its scaling approach. Among the renowned companies in Singapore that consider all three factors is Chope. Headquartered in Singapore, Chope has thirteen investors including Square Peg Capital and Ant Group (Singapore restaurants, n.d.). Arrif Ziaudeen launched Chope to enable users to find and reserve restaurants through the company’s website, plug-ins, and mobile apps. For restaurants, Chope provides a lighter browser-based platform and a sophisticated and easy-to-use table management system, which integrates customer relationship management functions. The two functionalities provide restaurants control over their digital presence and online availability. Apart from online reservations, Chope provides diners with a summary of restaurant coverage and editorials, menus, operational information, and pricing for the listed food outlets (Singapore restaurants, n.d.). Alternative and emerging competitors to Chope include Table Check and Eat Books. The business landscape is dramatically changing and Chope should adjust its strategic approach to remain competitive.
Background
In a complex and fast-world world, startups either grow exponentially or drop out. Among Singapore’s restaurant reservations that have remained relevant in the start-up circuit is Chope. Started in 2011, Chope now has approximately 200 employees with more than 4,000 restaurant clients across seven markets; Singapore, Bangkok, Jakarta, Hong Kong, Phuket, Bali, and Shangha. Chope projects further growth given its 2018 revenue was 19.5 million dollars, which doubled from the revenue recorded in 2017 (Singapore restaurants, n.d.). Arrif Ziaudeen, Chope’s founder and CEO, formerly worked in private equity and management consultancy and studied law, with no previous interest in becoming an entrepreneur. Thus, Ziudeen’s entrepreneurship journey was by chance rather than a strategically planned one. Ziudeen identified various problems in the food and beverage (F&B) industry like inconvenient reservations such that customers had to deal with busy phone lines subject to certain services.
The lack of an aggregator platform that would help people find places to eat sparked Chope’s inception. Ziudeen first viewed it as a problem since restaurants were increasingly falling behind in the digital wave before he turned the idea into a business. Consequently, Ziudeen looked at how restaurants around the world were resolving this challenge and gradually gained interest in the F&B industry. Today, Chope is celebrated for its restaurant reservation platform that provides innovative solutions for increased productivity and efficiency within marketing analytics and support and reservation management. Since its inception, Chope has received over 35 million dollars in funding from Singapore Press Holdings and venture capitalists (Singapore restaurants, n.d.). Therefore, Chope is focused on building a product suitable for every customer and one that offers startup restaurants with service software for a monthly fee.
Competitive Environment
The F&B industry witnesses increased competition with changing customer preferences and rapidly growing innovative solutions. Chope essentially makes dining easy by connecting diners to restaurants by liquidating its position trough making a gain and taking advantage of subsidies to achieve greater service efficiency (Singapore restaurants, n.d.). Therefore, the market structure impacts Chope’s opportunities and innovative solution, contributing to its steady growth over the years. Applying the demand and supply function, Chop has a consumer surplus of approximately 100 million dinners, which helps the company estimate service capacity to meet market demands (Singapore restaurants, n.d.). Chope allows diners to discover restaurants, place orders, and request pick-up and delivery. The generating diner platform is efficiently incorporated with integrated restaurant solutions, including reservations, table management, queues, and calls. Chope’s consistent growth over the years is contributed by top restaurant partners such as The Union Group, Soho Hospitality, Hospitality Management Asia, Lost Heaven, JUMBO Group, Commonwealth Concepts, Dining Concepts, and Ismaya Group. Further, the app’s ecosystem includes key partnerships with TripAdvisor, Google, Alipay, CapitaLand, Meituan Dianping, and DBS (Singapore restaurants, n.d.). While Chope’s organic search grows steadily, its social is trending down, as a consequence, attracting stiff competition.
Emerging and potential competitors with high similarity scores such as Chope include Seven Rooms, Quandoo Reservation Management System, the Honey Comber, Ordinary Patrons, Table Check, theFork, ResDiary, BookaTable, Eat Books, and Daniel Food Diary, to mention a few. Nonetheless, Chope’s discovery platform gives people numerous dining options, where people can discover new restaurants, familiar brands, and more. With discounted deals, Chope makes food tastes better since dinners can save on their cravings, from off-peak discounts to set menu savings (Singapore restaurants, n.d.). Apart from the good deals, Chope makes ordering and payment easy. Price elasticity of Chope’s demand affects its ability to adjust the price of its services accordingly. The app’s Order & Pay solution at restaurants and fast-food joints enhances the dinners experience. Customers can make bookings anytime and anywhere: Select a date and time depending on restaurant availability. In addition to securing restaurant reservations, users earn Chope-Dollars in every fulfilled reservation, which can be redeemed as part of a loyalty program.
Despite the growing competition, Chope’s global ranking has steadily increased with its audience interest primarily in finance, productivity, travel, and news and magazines. Thus far, Chope has made two acquisitions: Appic Technologies in 2014 and Makanluar in 2016 (Singapore restaurants, n.d.). Fundamentally, mergers and acquisitions result in greater financial strength for involved companies (González et al., 2020). González et al. (2020) asserted that enhanced economic power means reduced competitive threat, higher market share, and a broad customer base. Through the acquisitions, Chope aimed to realize economies of scale and financial gains. In particular, acquiring Appic Technologies made Chope more productive and efficient for increased access to investment, better bargaining power, and lower costs due to high volume production. Attaining economies of scope has given Chope greater financial strength to remain a top restaurant reservation app in Singapore.
Greater economic power potentially results in higher market share, reducing the competitive threat. Access to resources and the best talent give Chope an advantage in influencing prices. Talent acquisition attracts innovative solutions while access to critical and tangible resources improves service cycles, from restaurant search to order pick-up (Hongal and Kinange, 2020). The acquisitions further allowed Chope to diversify its risks through portfolio divergence, ensuring its long-term sustainability. Moreover, acquiring Appic Technologies and Makanluar gave Chope access to foreign geographical markets that can be challenging to penetrate. Thus, Chope’s acquisition strategy helped meet its unique goal for access to resources and new markets.
Pricing Strategies
Since its inception, Chope has seen revenue growth and projects more profits. The booking site recently concluded a 2.5 million dollar round largely contributed by Singapore Press Holdings, which owns part of Chope, having invested 1.45 million dollars in the business (Singapore restaurants, n.d.). With investments in innovation, research, and development, Chope has improved its pricing strategies to counter competition and expand its market reach. In Singapore, the site competes with HungryGoWhere with over 1.1 million site visits monthly (Singapore restaurants, n.d.). While Chope continues to serve more dinners, the restaurant listing numbers of HungryGoWhere remain higher (Singapore restaurants, n.d.). For this reason, Chope aims at staying visible and connected, maximizing its cash flow, streamlining costs, and creating flexible terms for both restaurant owners and dinners. Subsequently, Chope has adopted key pricing strategies to increase its bottom line.
The bottom-line growth in any business metric involves costs like cost per acquisition, gross profit, return on investment (ROI) and return on advertising spend (ROAS). Chope adjusts its pricing through second and third-degree pricing discrimination. According to Bonatti and Cisternas (2020), companies practice price discrimination with the belief that customers can either pay more or less based on product value or certain demographic factors. However, price discrimination is valuable for companies to separate profits earned from the markets. Chope looks to make sales and identify various market segments with second and third pricing discrimination. Through its monopoly power, Chope makes price discrimination furthermore effective. In second-degree price discrimination, a business charges different prices depending on the quantities consumed like discounts on bulk purchases (Bergemann, Castro, and Weintraub, 2019). On the other hand, companies practice third-degree price discrimination when charging different prices to different client groups (Chandra and Lederman, 2018). Chope has sufficient market power and records differences in demand as relates to varying customer segments and conditions, which makes it possible for pricing discrimination.
Moreover, Chope offers a single product version, connecting restaurants and dinners, which might result in losses that might be higher than the services offered. A key characteristic of digital and software products is their high production cost and low reproduction cost. Chandra and Lederman (2018) asserted that customers often have a different value for a given product, making differential pricing necessary. A crucial pricing aspect used by Chope is value-based pricing such that it sells its services at different prices based on customers’ willingness to pay and other social and demographic factors. In most cases, companies find it challenging to directly identify market segments. Following this reason, Chope optimizes value-based pricing for differential pricing either through personalized or group pricing.
Personalized pricing demands an understanding of individual customers while group pricing covers market needs and preferences in its entirety. Snihur and Zott (2020) implied that the strategy to offer products or services in different versions based on market segmentation is termed as versioning. Through this strategy, Chope has designed a unique service line that appeals selectively to customers in Singapore and other location. Ziaudeen identifies the key service attributes of a restaurant booking site to segment the market accordingly. Common tactics are bundling and tying to degrade products or services on some attributes. More specifically, tying allows businesses to make a sale of a single conditional upon another purchase of another while bundling allows service providers to offer a discount when offering two or more products. Chope uses tying to leverage market power and gain a competitive edge through pricing.
Platform Scaling
Rapid and dramatic growth can make a business vulnerable to numerous problems. Scaling a business is instrumental in mitigating such risks by ensuring that the business operates within the scope of its vision and mission to support long-term growth and sustainability (Amankwah-Amoah, Khan, and Wood, 2021; Rigby, Sutherland, and Noble, 2018). Ziaudeen started Chope to fill a need in the food and beverage industry but then turned out to be a profitable business. Organizing production and output plays an integral role in facilitating the effective innovation of quality products and services (Pambreni et al., 2019). Entrepreneurs must grow their businesses to keep them profitable and relevant in the constantly changing market landscape. Rapid growth diminishes the significance of linear growth within which the most important work is often done. Scaling a business implies putting procedures and systems into place to establish core values, build brand identity, and prepare a business for profitable development.
Chope can align its strategies with its vision by developing a business map that prompts comprehensive and effective ways for meeting set goals while scaling a business. Most importantly, a business map can help define the primary purpose of Chope. Amankwah-Amoah, Khan, and Wood (2021) implied that that scaling a business is dependent on creating client loyalty. Chope should focus on staff loyalty and then pass the company’s enthusiasm on to its target market. Employees remain motivated and actively engaged when a company aligns its strategies with its values. Nonetheless, scaling a business goes beyond upward and outward growth and rather ensuring internal processes function seamlessly. Some of the processes and systems may fail to work on a massive scale, thus, adaptability and flexibility are key. Chope should establish a framework that will keep it running in the coming years.
Business strategies are unique, but Chope can adopt certain frameworks to successfully scale. For one, Chope should focus its offerings on meeting customer needs to eliminate the risks to scalability and growth. Lack of focus on business offerings can result in poor customer engagement, adversely affecting returns. For Chope to successfully scale, it must consider the importance of focusing its services and target market, positioning better to meet customer needs and remain competitive (Rigby, Sutherland, and Noble, 2018). Other ways Chope can focus its offerings is by assessing its strengths and weaknesses, carving out a service niche, assessing competition, developing an innovative solution, and studying market trends. Another strategy entails creating plans around realistic goals. Chope can effectively scale by striking a balance between setting challenging and reasonable goals. The underlying assumption of network effect implies that platforms with higher market share will likely have sustainable growth by creating competitive advantage (Hagiu and Wright, 2020). After aligning company goals, Ziaudeen should communicate his vision with the team to help Chope successfully scale. Investing in technology would further make the scaling process manageable and effective.
Conclusion
Chope is pressing forward in the global and digital marketplace to better meet the needs of its customers. The service platform leverages the boom in markets across Singapore to make customized content. Chope recognizes the importance of technology in terms of innovation and gaining a competitive advantage. Despite the startup continuing to pursue growth, the company must build a sustainable strategy to meet changing customer needs and emerging market trends. Chope can invest in newer markets for greater results as it scales up. Additionally, Chope should explore cooperation opportunities with non-competing firms in the same industry to gain cost-effectiveness in various business processes.
References
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