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MKTG476: Kayla Pega's Groupon Case Presentation

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Kayla Pega

on 19 June 2013

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Transcript of MKTG476: Kayla Pega's Groupon Case Presentation

GROUPON
FUNDING, PRODUCTION & DISTRIBUTION
ECO-SYSTEM
The Company
Platforms and Structure

Core Business
Problem
Funding
Distribution
Competition
Production
Overview
INDUSTRY
: Electronic Commerce (E-Commerce)
PLATFORMS
: Email, website or mobile app
GROUPON CATEGORIES: Local, National, Goods, Getaways and Live. Customers purchase the discount vouchers (“Groupons”) and redeem them with the merchant partners.
Launched in

November 2008
Groupon features a daily deal on the best stuff to do, see, eat, and buy in 48 countries (more than 565 cities) around the world.
By promising businesses a minimum number of customers, Groupon can offer deals that aren’t available elsewhere.
About 10,000 employees- Chicago headquarters, a growing office in Palo Alto, CA, local markets throughout North America and regional offices in Europe, Latin America, Asia and around the world.
DECENTRALIZED NETWORK
: Groupon connects many different companies to potential customers. Thus Groupon links various nodes to other nodes. Some nodes having more potential than others.
CHAORDIC ORGANIZATION
: Through selecting "Interests," Groupon knows the types of deals customers want and adapt to them to provide constant relevant deals.
FUNDING & DISTRIBUTION
Group Buying
FUNDING
: Businesses actually compete to be featured on Groupon by cranking out outrageous deals.
Only 10% of companies who apply get picked by Groupon.
However
, deals may not even yield profits for small businesses but it could be their only chance of going big through being marketed on Groupon.
PRODUCTION:
Groupon produces emails with deals to local businesses from ~50% up to almost 90% off the normal price. They also have a regular website and a mobile application.
DISTRIBUTION
: Delivers personalized/customized or highly relevant products/services with the use of
filters
of different categories to weed out irrelevant deals and focus on only emailing
daily deals
that are relevant to the particular user.
REVENUE, PROFIT SHARING & IP
OVERVIEW
REVENUE, PROFIT SHARING & IP
Revenue & Profit-sharing
Ownership

Intellectual Property (IP)
Incentives

CORE BUSINESS
CUSTOMER: Groupon is "an antidote to a common ailment for us

city-dwellers
." Groupon eliminates the overwhelming feeling of indecisiveness that comes with too many options and makes it simple by offering only the best businesses in the area.
EXTENDED ENTERPRISE
BOTH B2B & B2C
BUSINESS2BUSINESS (B2B)
: Through promising a certain number of customers to businesses, Groupon can provide great deals. Groupon helps local businesses to promote their products and market themselves with no upfront cost. This can greatly increase visibility of a business.
BUSINESS2CONSUMER(B2C)
: Through knowing the consumers interests and preferences, Groupon is able to provide relevant deals to ensure purchase.
BUSINESS ECOSYSTEM
COMPETITORS
EXTENDED ENTERPRISE
BUSINESS ECOSYSTEM
INDIRECT COMPETITORS
According to Business Insider, a potential
threat
to Groupon are Local Publishers due to their ability to have 3 factors:
Commitment, Liking and Authority
.
Although
Groupon's strengths
include
Scarcity
(Daily Deals) and
Social Proof
(# of people who have bought this deal), they lack the historical repetitiveness of recommendations that Local Publishers have given.
Source
: http://www.businessinsider.com/groupons-biggest-threat-local-publishers-2010-5
‘Nothing irritates people more than finding that they’re paying a premium over what other people are paying.’
PROBLEM
: It is costing Groupon more in marketing and sales to get fewer dollars from each customer.
The company’s workforce has significantly shrunk.
According to TheDailyBest.com, David Reibstein, a marketing professor at the Wharton School at University of Pennsylvania argued that Groupon’s
customers are “price-sensitive,”
always searching for the best deal they can find. This means that they are
not likely to turn into repeat customers
. So Groupon may offer a deal, possibly even at a loss, and potentially not even get any future business.
SOURCE: http://www.thedailybeast.com/articles/2012/11/30/why-groupon-and-living-social-are-doomed.html
Stakeholders
: Customers who get great deals, merchants & businesses who gain recognition and customers, and Groupon itself which gets a percentage of revenue from the deals.
INCENTIVE
: Groupon could shift their focus from purely bringing in new customers to giving an incentive to create
consumer loyalty
— so that good businesses don’t lose out after the deal is gone. Via Groupon's "My Rewards" and swiping a credit card at purchase, racking up points helps to maintain customers for those merchants and local businesses.
SOURCE: http://www.triplepundit.com/2011/12/group-buying-sustainable/
http://groupon.s3.amazonaws.com/demographics-page/demographics.jpg
REVENUE: Third party revenue recognition
"We generate third party revenue, where we act as the third party marketing agent, by offering goods and services provided by third party merchant partners at a discount through our local commerce marketplace that connects merchants to consumers. Our marketplace includes deals offered through a variety of categories including: Local, National, Goods, Getaways and Live. Customers purchase the discount vouchers (“Groupons”) from us and redeem them with our merchant partners."
SOURCE: Groupon.com
Source (for slide): http://www.slideshare.net/dahlenc/groupon-business-model
PROFIT SHARING
: Groupon has moved from its 50/50 percent revenue share to an 80/20, where Groupon only receives 20 percent of the revenue in order to accomodate businesses who feel the 50/50 share is too much.
Groupon is doing this in order to attract more appealing businesses who would have otherwise thought they could not afford it.
Intellectual Property:
According to Daily Deal Media, "Groupon created a business model that has been so successful that
there have been thousands of copycats jumping on board
in hopes of achieving even a fraction of the success that the coupon giant has seen." Not only this but copycats have been fine-tuning Groupon's "flaws," and thus creating a more seamless user experience.
SOURCE: http://www.dailydealmedia.com/468is-groupon-changing-its-5050-revenue-sharing-model/
Extended Enterprise
Groupon
Demographics
By: Kayla Pega
MKTG 476
Professor Honea
Ownership
SOURCE: http://www.nasdaq.com/symbol/grpn/ownership-summary
Founder: Andrew Mason
Full transcript