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Case Analysis Groupon
Groupon is an internet website company focused on generating revenue by utilizing relationships with merchants to provide consumers with discounts on select items. The goal of the discounted vouchers is to drive additional consumer store traffic and generate revenue for merchants which are shared with Groupon via a predetermined contractual percentage. Groupon generates visibility and exposure with email and social networking to increase consumer spending at specific merchants. Groupon has many features from personalization of product offerings to specific demographics and target segments. In addition, a more defined value proposition allowing merchants an opportunity to showcase their own product offerings on the Groupon website. Groupon stands behind every discount voucher sold and distributed. If the consumer is not 100% satisfied the company will provide a refund or financial credit for a future Groupon opportunity. Groupon began with a focus on major city markets and increasing email subscriptions to provide the required visibility to aggressively sell the discounted vouchers. Groupon evaluated retailers and suppliers and utilized marketing studies to discover the discounted vouchers should be tailored towards activities, dining, salon and spa services, and specific targeted merchandise in relation to the targeted demographics. This distribution accounted for 92% of the merchant category mix. For example consumers in Colorado were more prone to purchasing hiking and outdoor wear versus consumers in New York City. The positives for the retailer and supplier were many local merchants advertising and marketing budgets were minimal to non-existent. In addition, the merchants did not possess the expertise and talent to utilize new media and technology. With no upfront costs required the initial concept of Groupon was very appealing to merchants. The vouchers would drive new consumer business to the stores for minimal to no...
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