Groupon - Case Study

There are three important areas that need to be addressed in order to ensure future success. First, the company needs to ensure that it is providing its customers and merchants with value. Second, it needs to be able to address the threats that are posed by competitors such as Facebook, Google, and LivingSocial. Third, Groupon needs to keep innovating in order to prevent the company from "devolving into a service that isn't delighting its customers."

Groupon's growth created significant management challenges which have the potential to affect the value of the services being offered. On one occasion, a restaurant in Japan was overwhelmed with clients as a result of using Groupon. This resulted in the restaurant providing poor service and delivering the "osechi" sets in poor condition. Mason responded to this problem by posting a YouTube video, conceding that his company had "really messed up." There was another situation where customers accused FTD of overstating its retail prices to make the offer seem more attractive. Also, there are regular patrons that feel that Groupon is a curse because the business they are used to attending is destroyed during promotions as a result of being too busy, under-staffed, and out-of-menu items.

The next thing that Groupon should be concerned about is the stiff competition that they face. Groupon implements a fairly simple and cheap business model. The Groupon business model does not require that the company hold inventory, nor carry out fulfillment. Groupon relies on the merchant partners to do all of the hard work. The technology that Groupon relies on is pretty basic because it requires mostly things such as email, transaction processing, and a website that was fairly basic by Web 2.0 standards. Since Groupon uses such a simple and cheap business model it makes it very easy for other competitors to try and duplicate this model. Groupon faces such rivals as LivingSocial that is based out of Washington, DC that is rapidly growing and has a rapidly growing number of subscribers. Groupon should probably be more concerned about the big heavyweights such as Facebook, and Google. These two companies are extremely successful and have a lot of money to compete against Groupon. They are also creating services such as "Google Offers" which promotes deals that are relevant to a customer's current location. Google and Facebook are not only trying to duplicate the Groupon model, but they are trying to build upon it with better and new creative ideas.

Groupon also needs to make sure it keeps innovating. Groupon tried to be creative in one situation by trying out something called "Deal Feed." It seems that this idea did not go over as well as anticipated with consumers. Groupon does seem to have a better idea with its "Groupon Now" option which allows customers to access promotions with their smart phones.