Case Study Description of Kimpton Hotels - Setting Prices on Priceline (B)
In June 2008, the Kimpton Hotels' area director of revenue management (director) for Washington, D.C. finished creating a pricing strategy that would determine the optimal posted price for rooms in the Washington, D. C. hotel as well as the number of rooms that should be provided to Priceline.com. He realized there was even more potential to gain revenue by posting more than one price; however, this would add further complexity into the strategy and he was unsure of the potential impact of having multiple posted prices.
Authors :: Chris K. Anderson, John G. Wilson, Joel Read
Swot Analysis of "Kimpton Hotels - Setting Prices on Priceline (B)" written by Chris K. Anderson, John G. Wilson, Joel Read includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kimpton Posted facing as an external strategic factors. Some of the topics covered in Kimpton Hotels - Setting Prices on Priceline (B) case study are - Strategic Management Strategies, and Technology & Operations.
Some of the macro environment factors that can be used to understand the Kimpton Hotels - Setting Prices on Priceline (B) casestudy better are - – digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, wage bills are increasing,
increasing commodity prices, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Kimpton Hotels - Setting Prices on Priceline (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Kimpton Hotels - Setting Prices on Priceline (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kimpton Posted, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kimpton Posted operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Kimpton Hotels - Setting Prices on Priceline (B) can be done for the following purposes –
1. Strategic planning using facts provided in Kimpton Hotels - Setting Prices on Priceline (B) case study
2. Improving business portfolio management of Kimpton Posted
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kimpton Posted
Strengths Kimpton Hotels - Setting Prices on Priceline (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kimpton Posted in Kimpton Hotels - Setting Prices on Priceline (B) Harvard Business Review case study are -
Effective Research and Development (R&D)
– Kimpton Posted has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Kimpton Hotels - Setting Prices on Priceline (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Kimpton Posted has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kimpton Posted has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Kimpton Posted digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Kimpton Posted has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Operational resilience
– The operational resilience strategy in the Kimpton Hotels - Setting Prices on Priceline (B) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Analytics focus
– Kimpton Posted is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Chris K. Anderson, John G. Wilson, Joel Read can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High brand equity
– Kimpton Posted has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kimpton Posted to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Technology & Operations industry
– Kimpton Hotels - Setting Prices on Priceline (B) firm has clearly differentiated products in the market place. This has enabled Kimpton Posted to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Kimpton Posted to invest into research and development (R&D) and innovation.
Training and development
– Kimpton Posted has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Kimpton Hotels - Setting Prices on Priceline (B) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Ability to recruit top talent
– Kimpton Posted is one of the leading recruiters in the industry. Managers in the Kimpton Hotels - Setting Prices on Priceline (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Kimpton Posted is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Kimpton Posted is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Kimpton Hotels - Setting Prices on Priceline (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Kimpton Posted has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Kimpton Hotels - Setting Prices on Priceline (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Kimpton Posted is present in almost all the verticals within the industry. This has provided firm in Kimpton Hotels - Setting Prices on Priceline (B) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Kimpton Hotels - Setting Prices on Priceline (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kimpton Hotels - Setting Prices on Priceline (B) are -
Products dominated business model
– Even though Kimpton Posted has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Kimpton Hotels - Setting Prices on Priceline (B) should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Kimpton Hotels - Setting Prices on Priceline (B), is just above the industry average. Kimpton Posted needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Capital Spending Reduction
– Even during the low interest decade, Kimpton Posted has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Aligning sales with marketing
– It come across in the case study Kimpton Hotels - Setting Prices on Priceline (B) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Kimpton Hotels - Setting Prices on Priceline (B) can leverage the sales team experience to cultivate customer relationships as Kimpton Posted is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Kimpton Hotels - Setting Prices on Priceline (B) HBR case study mentions - Kimpton Posted takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Low market penetration in new markets
– Outside its home market of Kimpton Posted, firm in the HBR case study Kimpton Hotels - Setting Prices on Priceline (B) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kimpton Posted is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Kimpton Hotels - Setting Prices on Priceline (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Kimpton Posted is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Kimpton Posted needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kimpton Posted to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Kimpton Posted products
– To increase the profitability and margins on the products, Kimpton Posted needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Kimpton Posted needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow decision making process
– As mentioned earlier in the report, Kimpton Posted has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Kimpton Posted even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Opportunities Kimpton Hotels - Setting Prices on Priceline (B) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Kimpton Hotels - Setting Prices on Priceline (B) are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Kimpton Posted can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Kimpton Posted to increase its market reach. Kimpton Posted will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Using analytics as competitive advantage
– Kimpton Posted has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Kimpton Hotels - Setting Prices on Priceline (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kimpton Posted to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Kimpton Posted can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Kimpton Posted can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kimpton Posted is facing challenges because of the dominance of functional experts in the organization. Kimpton Hotels - Setting Prices on Priceline (B) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Learning at scale
– Online learning technologies has now opened space for Kimpton Posted to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Kimpton Posted in the consumer business. Now Kimpton Posted can target international markets with far fewer capital restrictions requirements than the existing system.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Kimpton Posted to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Kimpton Posted can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Kimpton Posted can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Leveraging digital technologies
– Kimpton Posted can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Buying journey improvements
– Kimpton Posted can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Kimpton Hotels - Setting Prices on Priceline (B) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Creating value in data economy
– The success of analytics program of Kimpton Posted has opened avenues for new revenue streams for the organization in the industry. This can help Kimpton Posted to build a more holistic ecosystem as suggested in the Kimpton Hotels - Setting Prices on Priceline (B) case study. Kimpton Posted can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Kimpton Hotels - Setting Prices on Priceline (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Kimpton Hotels - Setting Prices on Priceline (B) are -
High dependence on third party suppliers
– Kimpton Posted high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kimpton Posted can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Kimpton Hotels - Setting Prices on Priceline (B) .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kimpton Posted in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Consumer confidence and its impact on Kimpton Posted demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology acceleration in Forth Industrial Revolution
– Kimpton Posted has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Kimpton Posted needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Kimpton Posted business can come under increasing regulations regarding data privacy, data security, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Kimpton Posted.
Environmental challenges
– Kimpton Posted needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Kimpton Posted can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Regulatory challenges
– Kimpton Posted needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Technology & Operations industry regulations.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Kimpton Posted can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Kimpton Posted can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kimpton Posted with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of Kimpton Hotels - Setting Prices on Priceline (B) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Kimpton Hotels - Setting Prices on Priceline (B) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Kimpton Hotels - Setting Prices on Priceline (B) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Kimpton Hotels - Setting Prices on Priceline (B) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Kimpton Hotels - Setting Prices on Priceline (B) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Kimpton Posted needs to make to build a sustainable competitive advantage.