Affectiveness of Groupon Promotions and Variables Influencing their Effectiveness for Local Business

By

Executive summary

The course of the study is based on the detailed analysis of the Groupon promotion, which has gained a wide popularity in a couple of years. Social promotions is quite popular among the consumers and it is quite unclear that how businesses and companies fare up on running these promotions. In a research based survey that comprised of businesses that used Groupon promotions between the time period of (June 2009 and August 2010). We have found out that the 66% of the business that used Groupon promotions have found it profitable for their businesses, while the rest have opposite views. When we compared the results of businesses who reaped profits from Groupon promotions, in contrast with those without profitable results from the promotions reported a significant lower rates of both spending Groupon users beyond its face value (25%vs. 50%) and return rates to purchase from the business again at full prices (13% vs. 31%). Many respondents who participated in the research were not satisfied with the extreme sensitivity of prices and transactional orientation of consumers. We have also found that the primary driver of the profitability for the promotion is the employee satisfaction rather than the features of the promotions. Based on these findings we have provided suggestions to modify social promotion offers and to provide with better balance and consumer appeal.

Table of Contents

Chapter 1: Introduction5

Background5

The history of Coupons and Price discrimination marketing5

The history and story of Groupon and (thepoint.com) website8

A brief look at the Groupon business model, Groupon website and the way group buying works9

The foundations of the business model Groupon9

Groupon pays for itself in large part10

The speed of development of Groupon10

How Citydeal was acquired by Groupon seven months after its creation11

How Groupon continues its development11

Key data on Groupon12

Human Resources Groupon12

Commercial presence Groupon12

Financing Groupon12

Turnover of Groupon12

Recent developments in sales in 2011.13

Retail partners13

IPO14

Clients14

Promotion Strategy14

Optimize performance to control costs14

Sponsored Links (Adwords)15

Performance marketing15

Sponsored Links Network (Adsense)15

Aggregators offers at bargain prices15

Viral Marketing15

Parainnage15

Dynamics of group purchasing16

Social networks16

Evolution of traffic according to Comscore Groupon USA16

Groupon, business discounts and sales promotions17

Groupon has become one of the leading innovative companies17

Brief look at Groupon's global position and expansion strategies17

Difficult into China19

Pricing Strategy21

Product Offering22

Competitors22

Chapter 2: Literature Review23

Chapter 2: Literature Review24

Use of Social Sites for Promotions24

Database Giant26

Profitability of Groupon promotions27

Differences between profitable and unprofitable Groupon promotions29

Theory29

Limitations31

Chapter 3: Research Methodology33

Secondary Research33

References34

Appendix39

CHAPTER 1: INTRODUCTION

Background

The history of Coupons and Price discrimination marketing

One of the masterminds of the field of marketing, Asa Chandler initiated the coupon system in the year 1887. The co-owner of one of the most renowned company Coca-Cola, named it as coupon after concerning to the French word Couper which means to cut. Crystal ball shaped by Chandler established to be visionary as - since 100 years - a wide range of customers have turned towards the concept of savings. After the creation of the Internet, back in the year 1990, cautious U.S. citizens started dealing with clippers for websites that facilitated them to avail the printable version of coupons ...