1. What is Groupon and how does it work? What is Groupon’s market? What does this company do and how does it make money? Groupon is an online coupon that allows a customer who subscribes from Groupon.com to purchase or buy a definite service from a local business at a flat discount rate from 50 % to 90 %. A new Groupon is to be sent to the online subscribers each day and it has to be purchased before the specified time limit and it should have a minimum number if the buyers are decided before the deal is on and when the minimum number of subscribers wants the deal then the deal is said to be completed. The market for Groupon is the internet users or the online subscribers as it send the Groupon from various local businessmen to the online subscribers to get discount. When the Groupon is sent to the online subscribers they have definite time to subscribe the deal and pre decided minimum subscribers for the deal when the minimum number of subscribers wants the deal is reached the deal is said to be completed and the customers are charged for the deal and they receive the discount through e-mail or applications. And the Groupon gets 50 % of the revenue generated from the daily deals. a. What does Groupon do that makes businesses willing to pay for its services? The first reason it makes businesses to pay for its services is that any company or business wants customers and Groupon sells them new customers by giving the customers 50-90% discounts. And it makes the customers to share the deal to various social networking websites. Secondly Groupon has given exposure to the local business through daily e-mailed deals, bringing the Groupon customers to the doors of each participating business. Groupon could bring large number of customers to the store with the single event if the Groupon deal becomes very popular. b. Why is Groupon such a big deal? That is, why should consumers pay attention to what Groupon has to offer? Groupon gives the subscribers discount from 50 % to 90 % on specific services offered by the local businessmen so the customers are getting the services at good and reasonable price. And Groupon send the daily deal to the subscribers based on the purchases made in the past so here the customer or the subscribers are the one who are benefitted the more. The customers can share the deals with other friends and relatives too. So here consumers should give more attention to the Groupon deals to take the more advantage of the daily e-mailed deals. 2. Using Porter’s Five Forces as a framework, describe the competitive environment of the collective buying industry, pre-Groupon and post-Groupon.
1. Competition or Rivalry in the market
The most important thing is the number of the competitors offering undifferentiated products on the market Pre Groupon: Groupon has entered into the market and with the good marketing strategies and techniques like using social media pages and through e-mails it became quite successful limited to one specific area. As there were many competitors in the market with the same business Groupon survived as the discount rates was so high and it attracted the customers toward the deal. Post Groupon: Many new competitors have entered the attracted market in order to gain the same success that the Groupon has achieved and the initial competitors of the Groupon has achieved the success and hence the market just started be full of competitors.
2. Bargaining Power of Supplier
Here according to this force it is assessed that how easy is for the suppliers to fix the prices of their service and the products.
Pre Groupon: The supplier have full access of fixing the price for their services and product to their customers. Post Groupon: In this case study the power of supplier is considered to be the low-slung as the Groupon decides the discount given to their subscribers as they cannot interfere into the activities of the Groupon in fixing the discount for their services. 3. Bargaining...
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