Groupon Case Analysis

Overview of Groupon:

Groupon is a marketing services company that promoted local business by selling deeply discounted vouchers for their products and services. It was launched in 2008 in Chicago, Groupon is already present in 47 countries, 5 continents and more than 750 cities all over the world with more than 10,000 employees, 200 million subscribers, and an enviable position as the daily deals leader of the world. The company works as an intermediary between consumers and local merchants by selling discounts online.
The concept of Groupon is seen as an emerging marketing tool for local merchants and a new shopping experience for consumers. One of the main promises of Groupon is to enable customer’s loyalty and customer retention to
This presence is due the fact local business faces a variety of challenges of reaching customers because of their tight budget, lack of expertise, lack of adopting new technology and media. The lure of an outsourced online promotion with no up-front expenses as compared to traditional advertising helps Groupon in driving position by attracting local merchants to do business with them. Groupon took full advantage of social media to market their services as well as they have inside sales team for business over phone or email.

The Problems:
Although Groupon is the fastest growing company ever, but its financial position is very bad. As presented in the paper, Groupon never saw its profit since inception. It has tremendous top-line growth but no profit. Some says it is not worth of multibillion-dollar value. Although at the very first day of trading, its stock price was more than 30% but after several months stock price was declining. Some question about its business model. It also faces tremendous competition from its competitors like Google and copy cats.

Internal
Local businessman faces difficulty to best structure and operate a deal only 66% deal was profitable. 50% up sell to customers for more than face value of the coupon. 31% customers turn to full price customers 31%. Customers changes from savvy – customers to the general population and End user customers get low quality service and bad experience from the local business and lot of not redeeming customers are available.
It has been observed that Groupon is spending too much on marketing rather giving some incentives to merchants by more profit sharing. Their business model does not carter each merchants needs. They have to explain all pros and cons running a deal to the merchants. Each merchant has unique requirements for running business they have to analyze merchants need and find a way to fit in Groupon’s strategy.
Another issue Groupon is expanding too quickly without having any clear mission and vision statement. They do not have any check and balance approach whether it is feasible to expand too quickly or not. If you look at the sales revenue and never look at the expenditure then you will not survive in the long run. When you have a very organization with not check and balance approach then it is very difficult to control and suddenly you will find everything is