Case Study : Groupon

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Case Analysis: Groupon’s Challenge

Strategic Issues and Analysis
Groupon is an online group purchase website that offers customers a discount on different kinds of products and services. The biggest challenge for the company is that its business model is easy to copy.

Evaluation and Analysis
Groupon takes advantage of economies of scale to provide its customers with daily good deals. When the deals have obtained a certain quantity of buyers, the buyers will get the discount on the deals. The customers are willing to pay for the discounted products. Groupon gets commissions from the product and service providers. The providers are able to promote their products and gain benefits from the large quantity of orders. It is a model that can satisfy all the people: the customers, product sellers and the Groupon company. However, this business model is easy to imitate. It does not required high technology or unique skills to set up the business. Many internet companies, such as Google and Amazon, have stepped in this market. They have established similar business services.

Those competitors are attempting to grab market share from the leader, Groupon. For example, Google has set up its own online group buying websites, Google offer, and released more attractive offers by lowering the price than the similar products or services on Groupon. Therefore, customers have more choices of online group buying providers. Customers are able to find better products from Groupon’s competitors. With intensive competition, Groupon needs to consider how to maintain its market share and how to improve its services to attract more return customers in the short run. In the long run, the company needs to think about how to improve the business model to make it more competitive.

Alternatives
Groupon could start a customer loyalty program to cultivate a high loyalty customer group. The company could build an award system for the program. The customers could earn certain...
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