Case Study:
Want a deep discount on a deep-dish pizza ... a day at a health spa ... Major League Baseball tickets? If you like a bargain, e-coupon site Groupon may be for you. Or suppose you’re opening a gym: you need customers, and you need them fast. You can advertise your business sand hope to reach people with the desire and the cash to join. Or, using the power of social commerce offered by a site like Groupon, you gain exposure for your new business and attract interested shoppers through a discounted membership deal. Founded in Chicago, Groupon uses the Internet to help business owners connect with prospective customers. The rules are simple: Groupon works with the business to create a deal offering a discount on goods or services. Owners set the terms of the deal: the minimum and maximum number of takers and the discount amount (usually around 50 percent but sometimes more). Groupon features the deal for one day. If a prescribed number of shoppers—typically 50—take the deal, it’s a go. If not, the deal expires and no money changes hands. Meanwhile, Groupon makes money by pocketing a finder’s fee on successful deals. Groupon helps businesses reach target audiences without costly advertising and lets them mine a segment that doesn’t respond to conventional appeals: young professionals ages 20 to 30 who are typically online constantly. Subscribing is easy, and the site is fun: there’s a new deal each day in each of the 45 U.S. cities where Groupon currently operates. The deals represent a broad array of products and services. Some of them are your everyday purchases, like a haircut, a Mexican dinner, or a supermarket trip. Other deals may come from a new business in your city or an experience you haven’t tried, such as kayaking lessons, theatre tickets, or a museum membership. As Groupon knows, that the experience comes with a discount may be the push you need to buy. Subscribers have just a day to grab the deal. But nothing is entirely risk free. A successful Groupon deal creates a surge of business that brings the owner little or no profit. Where owners see profit is in follow-on business. Until then, a business can capsize under the surge if the owner didn’t take care to set things up wisely, with minimum and maximum limits and the right discount amount. Today, Groupon has more than 2 million subscribers and, in Chicago alone, a waiting list of business owners ready to make a deal.
Q1. Coupons are a tried-and-true promotion method, and the Internet includes other couponing sites. How does Groupon differentiate itself?
Q2. Groupon’s business strategy harnesses what it calls “collective buying power.” What facets of the marketing environment have enabled a business like Groupon to emerge and become successful?
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.