Groupon is a great example of how a company can turn to consumers, offer them a great service and encourage them to spread it around to reach an even bigger audience. This is marketing at its best! Can you imagine selling a product or service and sharing the service becomes very enticing due to the greater cost savings?
Many companies such as Living Social, Crowd Savings, Bloom Spot, Tippr and Scoop St have copied this huge success and raise the question that this particular business could easily be copied. This is a concern that some analyst predict due to the buyout that Google recently announced and Groupon subsequently turned down; read here.
This service spreads virally and now contaminates over 35 million people! This year alone they are projected to generate over 500 million! Talk about the fastest growing company ever! The business model is simple, offer a product that a company is selling at a deep discount and if enough people buy the product then you receive the discounted price. What does this do? It provides exposure for the companies that are otherwise not known and it brings in customers, and a lot!
Through word of mouth and large amounts of users registered in their website, Groupon has accomplished what few have and many want, successful advertising, with a 98% success rate.
You are right; this has to be marketing at its best. Especially considering that the businesses drawing customers through local e-commerce websites don´t have to incur in any expenses for advertisement campaigns. In the other hand customers are willing to look for special discounts offered at these websites, instead of trying to avoid ads (as in the case of direct marketing); this win-win scenario will definitely allow Groupon and its peers to continue growing at the fast pace seen so far.
ReplyDeleteGroupon does indeed bring in a lot of initial attention to companies, specially those companies that might not otherwise receive that advertising exposure, but how long does that really last? Consumers are going to these businesses because they're getting 50 to 90 percent off a service or product. As soon as the next coupon comes out for a different company but related service/product, those consumers could easily follow the deal and go there. To counter that, a company would have to keep offering the Groupon deal to retain those initial consumers. This basically means that they are offering that product or service at a loss every time to bring in those specific customers, and for a small business, that's just not very practical long-term.
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