Groupon Strategy Essay

Words: 1027
Pages: 5
Open Document
1. How have companies like Groupon affected the pricing strategy of firms? Historically, companies have issued coupons in order to attract new business or irregular customers that seldom purchase a company’s products and/or services, with the hope that they come back more often. This is consistent with the idea that getting new customers is more expensive that maintaining a customer base. Companies’ approaches when issuing coupons have usually been one of three: 1) taking a small hit (loss) in order to stimulate subsequent buys (“loss leaders”), 2) incentives and bonuses (free items when another one is purchased), or 3) making a lower profit, but nevertheless a profit, by issuing price discrimination coupons. All in all, these …show more content…
These firms complain that discounts purchased on Groupon, for example, are great for attracting large crowds of customers who never materialize on the promise to become regular customers. This type of situations leaves the firm at a loss, having provided goods or service 75% below their retail price and without the returning customers to make up for it. To mitigate this, firms should work with Groupon and the like to find better ways to reinforce policies, such as making a deal available for first time customers only. Or by offering a discount that is only good if a required number of future purchases is pre-bought. Of course, these approaches would likely scare off a number of customers genuinely interested in assessing the quality of a product and service, not wanting further commitment. Psychologically, it might be hard for consumers to become regular customers and have to pay twice for a product or service they’ve already experienced for half the price. The best solution is for firms to offer such a high quality or differentiated product, service, and/or customer experience that costumers will want to come to come back.

4. What will be the long run effect of companies like Groupon? Groupon and similar companies will likely become the standard way coupons and discounts are offered to most consumers. Offering
Show More

Related Documents: Groupon Strategy Essay

Groupon: A Comprehensive Strategy

Groupon: A comprehensive Strategy TM583 – Course Project By Jesse Marcano Cory Shenault Clifton Leonard Table of Contents Introduction 2 Section 1 - Strategy 3 Section 2 – Core Competencies 6 Section 3 – Industry Dynamics 10 Section 4 – Technology Sourcing and Internal Innovation 13 Section 5 – Product Development Strategy 16 Section 6 – Strategy to Protect Innovations 17 Conclusion 20 Bibliography 20 Introduction Groupon did not invent the daily deal website; however…

Words 5468 - Pages 22

Groupon Business Model

Marakas (2011) in Management Information Systems, “A business model is a conceptual framework that expresses the underlying economic logic and system that prove how a business can deliver value to customers at an appropriate cost and make money.” Groupon, in terms of business model, is a typical example of the aforementioned emerging trend. In this section, significant components such as customer relationships, market segments, revenue generation, and value chain structure that underlie the business…

Words 1854 - Pages 8

Groupon Paper

GROUPON, INC. STRATEGIC AUDIT Aaron Boone Kathryn Dennis Nicolas Givens Wei Wei Kong Danielle Rittenhouse December, 2 2014 Time Table In 2006, Andrew Mason was unhappy with a cell phone contract. Created company called “ThePoint”, designed to be a tool for raising money for various causes. ThePoint lacked was too broad to achieve success, but had potential. Kept the same focus of consumers feeling like they had the buying power Began recruiting merchant to offer discount in online dealer centered…

Words 3592 - Pages 15

Case Study Of Groupon

SUMMARY Groupon is an online group buying company, which offers subscribers different online group discount in every single day. The revenue and the number of subscribers are continuously increasing since 2008 and have now expanded into many countries. The report identified three issues: merchants are expecting large exposure rate by using Groupon as an advertising platform, but they did not realize that the brand image of merchants might be cheapened due to massive price reduction. Besides, maintaining…

Words 4558 - Pages 19

Business Models Essay example

sustainable basis. Examples Razor versus razor blades Kindle versus iPad Southwest Airlines versus American Airlines Costco $9.00 $37.57 Bill of Materials (BOM) 6 7 Strategy Elements for Two Airlines Element American Southwest Customer Customers to many places in the world Customers point to point in U.S. Product Accessibility Price Service Differentiation Wide product scope; flies almost anywhere Limited…

Words 4627 - Pages 19

Film and Revenue Model Essay

Evaluation and Recommendations for an e-business Website Introduction of website With the rapid development of technology and information, the film industry grows increasingly. In my report I prepare to introduce Mornington Cinemas website in Melbourne (www.morning toncinemas.com.au). Briefly I introduce the Mornington Cinemas website detailed business information. The Mornington Cinemas website information posts some content of films that were screening on the cinema recently. Exactly cinema…

Words 2556 - Pages 11

What Is Solomon's Bakery

Part 8. Promotional strategy The marketing objectives for Solomon’s Bakery are to find who Solomon’s Customer is, to increase online presence having more than 3000 people on their e-mail subscription list, and to have 5% of overall sales come from the online ordering over the next year. The First goal of finding out who really is Solomon’s customer will be achieved by tracking with a CRM system to manage data and find trends. By surveying customers and having them sign up for customer reward programs…

Words 446 - Pages 2

Case Analysis Essay

located in London, Ontario, and will be owned by two partners named Greig and Angels. This café store will through the café, also it by having a variety of board games for the public. The problem now is Greig and Angels have to make the marketing strategy decision to successfully launch beyond the bean to gain and sales to break even and let the Beyond The Bean to capture the market in London, Ontario. Alternatives: Beyond the Bean near the Western University in London, Greig was considering four…

Words 475 - Pages 2

Research Paper

Marketing in Today’s Business I have read and understand the plagiarism policy as outlined in the syllabus and the sections in the IWU Catalog relating to the IWU Honesty/Cheating Policy. By affixing this statement to the title page of my paper, I certify that I have not cheated or plagiarized in the process of completing this assignment. I also certify that the work submitted is original work specific for this course and to my program. If it is found that cheating and/or…

Words 2580 - Pages 11

The Wild Wheat Bakery Essay example

WILD WHEAT MARKET STRATEGY PLAN TABLE OF CONTENTS A. SITUATION ANALYSIS, pg. 2 a. PRODUCTS, pg. 2 b. PRICE, pg. 3 c. PROMOTIONS pg. 4 d. SALES, pg. 5 e. DISTRIBUTION, pg. 6 f. COMPETITIVE ANALYSIS, pg. 8 g. THE CURRENT MARKET, pg. 9 h. ENVIRONMENTAL FORCES IN THE MARKET, pg. 13 i. MARKETING STRATEGY GRID, pg. 14 j. THE MARKETING INFORMATIONS SYSTEMS, pg. 14 B. MARKETING STRATEGIES, pg. 15 a. MAJOR STRATEGY STATEMENT, pg. 15 b. OBJECTIVES, pg. 16 c. BASIC…

Words 7889 - Pages 32