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Groupon

Prezi for Industry Analysis on Groupon
by

Branden Varga

on 12 December 2010

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Transcript of Groupon

Background Innovation Use Cases Advantages of Groupon Weaknesses Recommendations Future Relatively new concept. Started with Groupon.com in Nov. 2008 Perfect Competition or Oligopoly? Oligopoly
Mainly two large competitors; Groupon and LivingSocial, who control 90% of daily-deal market
Easy business concept, but hard to maintain customer and business relationships Perfect Competition
Many buyers and sellers
Low barriers of entry
Price change by one affects entire industry Already over 1 million subscribers to Groupon in Chicago Simplicity of website and purchasing process Using social networking and "word of mouth" advertising Largest market share of collective buying websites with 35 million users in over 150 U.S. markets and 100 foreign markets in 35 countries Groupon Stores - allowing individual businesses to create their own customizable Groupon deal with no middleman, just a 10% commission on all sales
Cuts down the 35,000 company waitlist Deal Feed - just like a News Feed, allows user to follow individualized needs and deals that pertain to them Trusted most by businesses according to Rice University Study On Nov. 30, 2010, Google offered to buyout Groupon for $6 billion. Groupon rejected. 1 year -
With Google buyout bid rejected, expect other offers to continue. Or possibly even an IPO.
LivingSocial, with Amazon investments, will triple its size to compete with Groupon.
With global acquisitions in Europe and Asia, opportunities for global growth will continue to arise.
Facebook and other sites are looking to dominate the local commerice market and could potentially create a collective buying application of their own. 5 year -
Although barriers to enter this market are low, it is hard for a collective buying site to maintain or create traffic to the site and maintain relationships with customers/businesses. Expect many current sites to close down.
Because of the major expansion of current big name sites, as well as the potential entrance of large companies (i.e. Facebook), the collective buying industry will probably be an oligopoly.
We wide recognition of how popular collective buying will become, we expect most businesses will offer some type of collective buying coupon. 10 year -
Realistically, it is complicated to know where this industry will be with such massive growth in the 2 years since the collective buying inception.
Social networking, which has played an integral role in collective buying growth, will continue to be an important roll in order for businesses to sell their coupons. Without the user and business base to buy and promote, there will be no growth. CEO Andrew Mason, “Today things are different – our biggest problem is that demand is so high, merchants often wait months to be featured. And while we once only had a few thousand customers per city, now we have hundreds of thousands – making it increasingly difficult to find one deal that satisfies everyone.” Taking advantage of an untapped market need Social marketing for large and small businesses alike Emphasis on collective buying power How businesses typically get started with Groupon...
Company fills out questionnaire
Groupon contacts them
Groupon works with businesses to structure an offer that will maximize value to them

Pro: Groupon works to "tailor"offer to fit company needs

Con: Wait list up to months! The "one-time buyer" Groupon 2.0

Merchants can now offer customizable Groupon deals whenever they want by going to "Groupon Stores", claiming their store and creating their own deal with no middleman.

With this method, Groupon just takes 10% commission on all sales, as opposed to the 50% the company usually takes off. Brand loyalty is difficult to maintain because many consumers using Groupon are one-time bargain shoppers
Businesses are unable to establish the customer base they want Proceeds are not given back to the local economy For the "one-time" buyer -
Cross-sell or multiple-use Goupons instead of one Groupon for entire store
Or instead of a $60-value Groupon for $30, have 3 seperate $20-value coupons for $10 that must be used during seperate visits Merchants lose 75% of what they'd normally make for any given sale Remaining 25% goes directly to Groupon which isn’t locally owned and that revenue doesn’t return to the local community From the Business Perspective From the Consumer Perspective Allows individuals to experience products or services they never thought to use before The Long Tail Guaranteed new customers Employee happiness is at risk:

A major influx of customers for businesses that aren't prepared can result in stress, anxiety, and dissatisfaction with the program. Efficient, measurable marketing Work with business to set reasonable time limits and caps on groupons, or specific periods when each customer can redeem their Groupon Groupon Stores allow merchants to:

Setup a FREE permanent e-commerce presence on Groupon for promoting their business
Create their own offers to run deals whenever they want
Submit deals to be promoted to Groupon subscribers through email and the Deal Feed
Get customers to follow their Groupon Store, and stay in touch by sending messages through the daily email and deal feed. We recently purchased a $50 Groupon worth $103 for a GPS-guided, narrated GoCar Tour. Simply entered credit card info, clicked on the buy button, and receieved Groupon through email. Simple, but eye-catching design, allows ease of use for all customers, Feature "package deals," combing several Groupons together.
(Ex.) Date Night Package - consisting of a show, dinner, and hotel Groupon.
Customers can opt to either purchase Groupons separately or purchase all three for an even greater savings deal
“The only downsides to Groupon are you never see the guests return because they are bargain shoppers, it can create a wait that negatively influences full-paying guests and it is difficult to track/redeem.” – Restaurant, Southern US Feature more daily deals within cities instead of only a select few Katrina Oropel
Branden Varga
Ellen Grace Donida Tips for Businesses
Hire temporary workers
Follow up with excellent customer service
Track the success of the deal
Full transcript