Groupon Inc: Daily Deal or Lasting Success

“Groupon, Inc: Daily Deal or Lasting Success”

Synoposis

Originated in Chicago Illinois, Groupon began as a local discount service and became a global phenomenon seemingly overnight. (Wheelen, Hunger Hoffman, & Bamford, 11-1) Groupon name created with a combination of the words "group" and "coupon" was founded in 2006, by Andrew Mason a graduate from Northwestern University with a degree in music. Named ThePoint designed to be a mechanism in raising money, Andrew created a webplatform based on the "tipping point" principle which utilized social media to organize collective actions. (Wheelen, Hunger Hoffman, & Bamford, 11-1). Groupon emerged fast, within six months their daily deals were well know in places like Boston, New York and Washington, DC. The companies estimated worth was over $1 billion just 16 months in business, becoming the second-fastest website to reach that milestone. (Wheelen, Hunger Hoffman, & Bamford, 11-2). YouTube was first.

Groupon acquired nearly 35 million subscribers with its drastic globalization in Europe, Asia, and South America. In August 2010 the company turned down a $6 billion dollar acquisition from Google. Groupon went public in November 2011 and produced $700 million in its initial public offering. With the growth of its IPO, Groupon's stock reduced 84% from $26.11 to close to at $4.15 on August 31, 2012. (Wheelen, Hunger Hoffman, & Bamford, 11-2). The company offered merchants opportunities to feature their products to consumers and consumers buying power and deals based on individual customer preferences.

Consumers subscribed to Groupon's mailing list and chose their locations were they want to receive information on deals within their area. Groupon described itself as "a local commerce marketplace that connects merchants to consumers by offering goods and services at a discount and brought the brick and mortar world of local commerce onto the internet. (Wheelen, Hunger Hoffman, & Bamford, 11-3) Groupon's objective was to become an essential part of everyday local commerce for consumers. (Wheelen, Hunger Hoffman, & Bamford, 11-4)

Finding of Fact: "Merchants were not completely at ease with the Groupons Business Model (Wheelen, Hunger Hoffman, & Bamford, 11-3).

Merchants viewed heavy discounts required and low repeat rates from customers as their two biggest threats. Groupon had merchants sign contracts establishing the number of coupons that they would have to offer and groupon would collect 50 percent of revenue. Merchants satisfaction and retention were critical to Groupon's mission and strategy to success. (Wheelen, Hunger Hoffman, & Bamford, 11-3). I believe groupon should continue to follow their key elements of their strategy which is to grow subscriber and customer base, number of merchant partners, position groupon to benefit from technological changes that may affect consumer behavior, increase the number and variety of products through innovation, and expand with acquisitions and business development partnerships. (Wheelen, Hunger Hoffman,