The humble coupon has gotten a boost from social media. Groupon, the group deal-of-the-day coupon service that started in late 2008, is exceeding even Google's and Facebook's phenomenal early growth rates. It now offers about 1,000 deals every day to more than 70 million subscribers in almost 50 countries. The business model is simple. A business sets up a deal through Groupon, such as offering $50 worth of merchandise for $25, but the deal is only honored if enough people sign up for it. Groupon typically takes a 50 percent cut of all the revenue generated on the deal (that is, $12.50 of the $25 the consumer pays for the groupon). In return, the business gets a lot of store traffic from the deal. Because the business model is so simple and the entry barriers so small, there are now more than 600 of these digital daily-deal online sites.
1. Debate the pros and cons of offering coupons through digital deal-of-the-day Internet sites such as Groupon from the perspective of businesses offering the deal.
2. Create an idea for a local group-buying promotional service based on Groupon's model as a class project or as a fundraiser for a student organization at your school. Students will be the target market of this digital deal online site. Develop a sales plan to recruit local businesses to offer deals as well as the promotion plan to attract students to the site.