Groupon Case Study Analysis

882 Words 4 Pages
Groupon Case Analysis
Resulting from an experiment to gain commission, Groupon emerged as a separate business, closing at $17 billion on the first day of trading. The initial aim of Groupon was to keep its business localized, focusing on local merchants, and limiting their promotional deals as one per day, to combat the lack of resources. Their promotional deals mainly consisted of discounts on leisure, entertainment, and recreational activities. Groupon’s business model currently earns 50% of the commission on sales for introducing consumers to merchants. This model is known as the discount deal coupon model. Basically, customers are attracted to merchandise below retail value, which therefore increases business for merchants.
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By distributing the job functions, Groupon ensures the quality of work, as each individual is specializing in one aspect of the bigger picture, thus providing better service. Also, by knowing who their market consists of, such as mainly women, they can create deals which resonate better with the consumer, for example spa discounts, which ultimately brings in more business. In addition, Groupon does pretty well in terms of handling customer’s criticism and complains, such as the incident with consumers’ expired vouchers which Groupon refunded them for, as they had not been used. This creates a good experience for consumers, and leaves them with a positive outlook on Groupon, and encourages them to make further …show more content…
Given that it doesn’t take much to imitate Groupon’s model, companies such as Google, Facebook, LivingSocial, The Knot, and etc., have tried to imitate Groupon’s model, with most companies not performing as well as Groupon. In order to out-win from its competition, Groupon needs to continuously provide valuable deals and exceptional customer service, and basically overcome its weaknesses. In order to do this, Groupon needs to continue its affiliation with well-known and reputed brands, which consumers will be interested in. Moreover, Groupon needs to assure that there are no cases of discrepancy when it comes to their services, such as the issue with the inaccurate description which was provided for a discount offer, by the editorial team. Issues such as the aforementioned one, poses an internal threat to the business and creates a negative experience for consumers, and can discourage them in the future from returning to Groupon. Another weakness Groupon needs to overcome in order to sustain itself, is to realize which kinds of deals are appealing to consumers, which can be done by conducting surveys. This would prevent them from external threats, and prevent them from repeating the mistake of offering deals such as pet daycare, which was a huge flop. Basically, Groupon has two main weaknesses, the first one being,

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