Groupon Inc Case Study

Groupon Inc.

Andrew Mason was a frustrated cell phone customer who was in need of cancelling his contract. Until he came up with what would be the beginning of a company that we know as today as Groupon Inc. It all began with that one cell phone company. Mason figured if he had problems with the carrier; many others will have the same issues. But how could he make people aware of this? With this, Mason started up a website called ThePoint, it was a website used to raise money for different causes. The website would use media to raise awareness using social media. After the declared amount of money was raised to accomplish the quota, the plan would become active. The only downfall would be that Mason would have to gain enough people to focus on one issue or service. Mason knew he would have to change his approach. The only way the tactic would work correctly, would be if he was to narrow down the focus. Then he began to reach out to local merchants to find ones who would be willing to offer coupons online using the tipping point principle.

In October 2005, Groupon launched its first deal. This would be completely change, “the way consumers spend, shop, and think about discounts (pg.11-1 para.1).” The company kept trucking on, in a matter of 16 months Groupon estimated worth was at US $1 Billion. By 2010 Groupon reached 150 markets in North America, and 100 markets in Europe, Asia, and South America. Mason created a worldwide success with the company; at that point he just had to figure a way to maintain it. Some of the early on problems that Groupon faced was its subscribers and merchants. Groupon had to figure a way to continue to retain good merchants to keep customers engaged with the company. While facing these matters Groupon was going international. The international process was away for Groupon to go into those untouched Groupon markets in different countries. In a matter of two years Groupons international segment would account for 60.6% of its 2011 total revenues (pg. 11-8 para.1).  This explosion of marketing and sales in the Groupon market would end up causing them annual net losses because of those high investments.

Over the next year Groupon would face its biggest problem, keeping its income above actual expenses. With all of the investments Groupon had, the company would also have to find a way to pay for all of the employees, and operating expenses. Groupon was starting to realize they would have to take net losses in annual income, accumulating a deficit of US $698.7 million in 2011 (pg.11-12 para.2). Groupon stuck to their guns with management, deciding to not pay dividends, “to retain all of our earnings for the foreseeable future to finance the operation and expansion of our business (pg.11-12 para.2).” Groupon decided to focus more on acquiring more revenue from subscribers, rather than focus on gaining new costumers. In the first quarter of 2012 the company was able to bring down its net losses to a US $ 3.6 million, compared to its loss of US $113.9 million in 2011, declaring that company was beginning to get its expenses under control; becoming the business we know as today, Groupon Inc.

Finding of Fact #1: Groupon has made significant investments to acquire subscribers through online marketing initiatives, such as search engine marketing, display advertisements, referral programs, and affiliate marketing.

Though Groupon has made several investments in trying to achieve subscribers, the world market is always evolving and it is up to merchants to keep up with these trends, as do the consumers. Right now in our society there is so much opportunity for business in our day-to-day activities and we as a society don’t even realize it. By Groupon Inc. merging with a business like Uber it will acquire more subscribers, increase purchases, and implement advertisement through every day activities.

Uber is a widely used mode of transportation that can be booked using your mobile device. Uber is not like your typical old taxi ride, though it shares the same concept of getting to a designated location, in this case any one can be an Uber driver utilizing their own vehicles. Uber has an application that you give your direct location of where you want to be picked up and where you would like to be dropped off using your mobile device, and then the driver will pick you up assessing the route provided. This is where Groupon comes in, Groupon could partner up with Uber, having the driver place a tablet specifically for Groupon so that the consumer may browse daily deals and services. With Groupon doing this, they will have accomplished multiple things. First, by implementing tablets into the Uber vehicles Groupon would increase its subscribers almost instantly; giving everyone the option to sign up if they do not already have a user account. Also amongst the car drive, consumers will browse the Groupon app. and will be more pressured to make purchases rather than relying on people to open the Groupon app. on their own. Lastly, would be that company would be providing advertisement for the company, and since the company is notorious for being passed around through word of mouth, these daily reminders would assist in boosting those day to day conversations making Groupon a much widely used application than it already is. By Groupon Inc. merging with a business like Uber it will acquire more subscribers, increase purchases, and implement advertisement through every day activities.