Groupon and It's Future

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Finding of Fact #2:

Groupon is in a highly competitive market in which many different competitors have very easy access to entry. Groupon needs to actively pursue a direction that will make it stand apart from current and future competitors. It does not have any marketable brand distinction from its competitors and it needs to stand apart.

Recommendations:

While getting more subscribers has been Groupon’s main focus for revenue growth and market dominance, Groupon needs re-access if this is a healthy long-term strategy. Groupon should prepare itself for decreasing subscriber growth and find a way to enhance the subscriber experience as well as increase the amount each subscriber spends with Groupon. Groupon’s competition is everywhere. There are many discount buying clubs on the Internet. Facebook and Amazon bombard the customer with advertisements specific to the customer that also offer immediate discounts. Sam’ Club offers discounted dining experiences right in the store. All you have to do is pick up a cardboard discount card and bring it to the customer and you receive a receipt for the discount at national food chains. Groupon’s value proposition is insufficient to convince existing subscribers to increase their buying activity. The level of loyalty is not to the service Groupon provides, but rather to local deal that interest the customer. In this sense Groupon fails to stand out from its competitors. Groupon needs to shift from a subscriber acquisition strategy to providing a much concierge based service function for each subscriber. Groupon’s brand is very week and they need to adopt philosophy of the best consumer experience in the industry. Groupon’s product lines have been rewards programs, a mobile app, some variation toward live concerts and vacations. All of these are tactics used by every discounter of any sort in the industry. Groupon has one significant asset at its disposal that’s underutilized. That asset is its 35 million subscribers, and their buying history. They have a huge amount of demographics and habits at their finger tips which they can data mine to create a unique buying experience for each subscriber and also tailor their offerings to what their data directs. Amazon and Facebook already do something similar. When you look at something on Amazon, Facebook shows you ads while you catch up with your Facebook friends. Groupon can market itself to a tailored concierge for it’s subscribers and focus on what the customer’s buying behavior and profile would show they desire, thus capturing their interest and spending dollars.

Finding of Fact #3:

Groupon is going to have a difficult time maintaining and growing its merchant base. This is critical for Groupon’s sustainability as a business and increasing the quality of its offerings. Groupon needs to constantly increase the value that its merchants perceive or it will start losing high quality merchants.

Recommendations:

Once again, the information given seems to point to Groupon is obsessed with acquisition of customers in its distribution behavior as well as its corporate acquisitions. Growth of the customer base seems to be a primary driver in Groupon’s marketing activities. For example in the text it states that Groupon created marketing relationships that “allowed for the distribution of daily deals to not only Groupon’s customer base, but also to the affiliate’s user base.” This is not a strategy that promotes Groupon value, but only acquires more subscribers and further exacerbates the introduction of the “one and done” consumer. This is a consumer who will visit, try the service, and leave for lack of anything considered special. With many of these types of subscribers, merchants will have to offer deep discounts to attract interest in the Groupon because there is no increase perceived value other than price. To combat this type of self-destructive behavior, Groupon needs change its perspective on merchants and become more of marketing agent as opposed to a deal middleman. Groupon can once again go to 35 million subscribers and data mine information for merchants that can assist the merchant in marketing their services and products. Groupon can sell information such as what markets are more profitable than other and what attributes do these markets possess as well as require. Groupon can supply success tactics on what the merchants need to provide subscribers and customers for being successful in their market category or segment. This will fuel more successful daily deals for the merchant. Groupon can also be a conduit to the merchant on market testing of new products or services, with the testing geared to the subscriber’s demographic profile. Groupon could even create an income stream as a marketing research and development or consultant partner for merchants. After this type of activity catches on and grows, Groupon can attract better brands and higher margin offerings, and eventually start to change its own brand to a be more exclusive or higher end. If Groupon doesn’t change itself to a better perceived value by merchants and subscribers, then it will be just a matter of time before Groupon becomes only a case history in business books and nothing more.