Groupon Analysis

Topics: Sales, Marketing, Consultative selling Pages: 2 (428 words) Published: October 15, 2012
Major Issues
-Labour intensive business model creates scalability challenges -Huge amount of competition : on paper coupons, similar sites, big players (amazon, facebook, google) , living social, international markets -Easy business to replicate

-Vendors not necessarily bought into the model (Merchants are not making money on daily deals (55%), 36% of customers spent beyond the voucher value (pg. 30)) -Customers are simply not loyal

Strategic Alternatives

1. become a niche player and dominate it
2. Understand the customer better - create loyalty based on their personal interests + pare down sales force by selling off some international sites where competition is high (ie. china with 3k sites). 3. Create a new type of deal which generates loyalty / bounce back + pare down sales force.

Options Grid
Option 1Option 2Option 3
Description of OptionBecome a niche player and pare down its sales forceCreate a more customized option for customers + pare down its sales force (by selling off some of the international subsidiaries)Create a new type of deal which encourages loyalty – ie. multiple visits Overall AssessmentDo not recommend:Risk of becoming another me too player like gilt, woot , etc.Recommend: they need to pare down their salesforce in order to get to profitability. Additionally, they have a huge customer and vendor base already. Do not recommend: Consumers are not loyal and there is not inherent proof in the market that consumers are interested in actually being loyal to a brand advertised on Groupon. Additionally, it is unclear whether this is a financially attractive option for the vendors (ie. bounceback offers) Strategic FitLow: completely opposite from their current strategy of having a wide offering, catering to multiple market segmentsHigh: Groupon already has the infrastructure (sales people, website backend (customer tools), and customer / vendor listsMedium: can leverage existing vendor and...
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