For all you bargain hunters, I got the deal for you, and its called GROUPON. Considered by Forbes as one of the fastest growing company on the web, Andrew Mason (founder) has technologically reinvented the way that the financially strict consumer clips coupons. A savvy way to explain the whole prinicple behind Groupon is the combination of the elements of coupons and group buying, as a way to strategically get customers into businesses, and ultimatey for these businesses to retain these customers.
So, how does Groupon do business?
With collective buying power, Groupon is able to negotiate with companies, where these said companies offer deep discounts to consumers in return for consumers with a deep seated interest in discounts. I have a friend who structures her social activities around Groupons. Her rationalization - why pay close to $50 for a manicure and pedicure at a salon, with deals like $25 for both could be accessed through sites like Groupon. She has been to salons, restaurants, and skydiving with her groupons. There is definitely no argument there when it comes to its social benefits.
The disadvantage to this type of living from the businesses' perspective is that there is no way that as a consumer you are doing anything, or spending any money without a deep discount. Thus, Groupon and other copycat sites like LivingSocial inc., BuyWithMe Inc. and Bloomspot Inc. caters to a certain type of consumer, the coupon clipper.
It is definitely a great marketing platform for the business because it brings a large number of consumers to the business, but in the long run does the business really benefit?
Analyse it from the perspective of the organization, yes, the doors are constantly flipping open during the "scheduled" period of the groupon (groupons do have expiration dates). However, what is the quantitative impact of groupons after the fact. Do these or more consumers return, even in the absense of groupons? Or would these said consumers only return if there was another deep discount?
I definitely would not doubt that busiensses have repeat clients, but this specifically leans on variables such as, the quality of the good and/or service received. Thus, it is the responsibility of the business to ensure that these groupon holders are not only driven by competitive price initiatives, but also are attracted to the quality of the goods and services, and the atmosphere (just to name a few variables), which may have a significant impact. Obviously, this is based on the assumption that most groupon seekers are first time users of the good and/or service.
Otherwise, in order to retain these consumers, the business would have to be consistent in terms of its significant price offerings on Gourpon. As previously mentioned, groupons attract a certain type of consumer, thus, the main question is whether this is the type of consumer that the business is aming to attract.
However, could we consider that "type" of consumer, all consumers, because we are all ready for some kind of discount.
Not sure if I am structuring my much needed social activities around the Groupon phenomenon, but its one of those ideas that after research you think "Why didn't I think about that?" especially, with large comapnies like Google noting the power of the group coupon phenomenon and placing a "deep non-discounted" offer on the table. In the article Why is Google Chasing the Groupon craze, it is understandable why Groupon is a hot topic, but with the growing number of copycat sites, with the same "deal of the day" motive, it might be ideal to take up google on their offer. I am not sure how far into the future the idea would stretch, without marketshare being thinly spread over the growing number of online group coupon sites.
Nonetheless, it is a great idea to grasp the immediate attention of the technolgically diligent and discount driven consumer. But, the business needs to determine whether it is the strategic business approach that would benefit the organization in the long run. Note, it definitely is not a risky investment, but proves to generate consumer interest in the shortterm.
Your business prodigy,
Alcina
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I really thing Groupon should have taken Google's offer. Really, who doesn't want to be affiliated with Google right now? And from my research I think Google made a pretty decent offer. Its only a matter of time before Groupon starts to see some losses because of the copycat sites you mentioned. But who knows, maybe they have a battle strategy for this. Thumbs up on the post!
ReplyDeleteThe way I see competition coming into play with the Groupon phenomenon is something similar to when travel agents went online and started offering lower airfare and hotel rates. Orbitz, Travelocity, Expedia, etc. I really don't remember who started out first but as soon as one came out and became a hit we had multiple other sites offering the same exact services popping out on the web.
ReplyDeleteIs this good for us as consumers? Of course!!! Please sign me up for a cheaper anything! Unless its something important and I require outstanding quality.
Is this good for the companies that create these sites? Yes and no. These companies now have to invest a lot more in their software and advertising campaigns to distinguish themselves from the competition. It will force them to become better and more efficient at what they do. (This is a good thing. Benchmarking) But it's an expensive process in an industry where you can be as cool and popular as Michael Jackson one day and be as uncool as Rosie O'Donnell the next day and your site is not worth the $6billion Google tried to buy you with a few days ago.
Salo