Groupon Case analysis
Groupon
Groupon, a new internet coupon sensation, was formed in Chicago to gain exposure to new businesses through discounted membership deals and has been on the rise ever since. This particular case study attempts to elaborate on the success of Groupon and how it works. The ecoupon was designed to help business owners appeal to new prospective consumers by advertising group discounts on products and services. There are a range of businesses that are advertised on the website. One can find discounts on spa packages, concert tickets, dinner and dessert specials, and more. The way it works is, the business owner makes a deal with the website by offering a discount on a product or service and tells how much they are willing to accept for it and the amount they’re willing to give away. Then, Groupon advertises the offer for a limited time and receives a finder’s fee once consumers purchase the deals. The business has full control over the minimum and maximum number of deals they’re willing to offer. If the deal doesn’t appeal to consumers then there is no financial loss to the business owner.
The intention of the business owner is not to gain a lot of profit from the deals made; rather the intent is to drive traffic to the business once the deal is over. Moreover, the benefit of Groupon to the producer comes after the deal is over and the benefit of Groupon for the consumer comes while the deal is still going on. It is a way for consumers to not only receive great deals but also establishes buzz marketing and word of mouth. It is very beneficial for those who invest in Groupon to get their services out in the public and gain a wider target market.
Table 1 shows comparison of porter’s 5 competitive forces before and after Groupon
Table 1: Porter’s 5 forces pregroupon and post groupon
Porter's
Competitive forces
PreGroupon
Post Groupon
Threat of new entrants Low Not too many competitors
Medium First entrant
Groupon, a new internet coupon sensation, was formed in Chicago to gain exposure to new businesses through discounted membership deals and has been on the rise ever since. This particular case study attempts to elaborate on the success of Groupon and how it works. The ecoupon was designed to help business owners appeal to new prospective consumers by advertising group discounts on products and services. There are a range of businesses that are advertised on the website. One can find discounts on spa packages, concert tickets, dinner and dessert specials, and more. The way it works is, the business owner makes a deal with the website by offering a discount on a product or service and tells how much they are willing to accept for it and the amount they’re willing to give away. Then, Groupon advertises the offer for a limited time and receives a finder’s fee once consumers purchase the deals. The business has full control over the minimum and maximum number of deals they’re willing to offer. If the deal doesn’t appeal to consumers then there is no financial loss to the business owner.
The intention of the business owner is not to gain a lot of profit from the deals made; rather the intent is to drive traffic to the business once the deal is over. Moreover, the benefit of Groupon to the producer comes after the deal is over and the benefit of Groupon for the consumer comes while the deal is still going on. It is a way for consumers to not only receive great deals but also establishes buzz marketing and word of mouth. It is very beneficial for those who invest in Groupon to get their services out in the public and gain a wider target market.
Table 1 shows comparison of porter’s 5 competitive forces before and after Groupon
Table 1: Porter’s 5 forces pregroupon and post groupon
Porter's
Competitive forces
PreGroupon
Post Groupon
Threat of new entrants Low Not too many competitors
Medium First entrant