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I have posted before on the daily deal site (see “Get to Know Groupon,” March 28, 2011).  If you are not up to speed on LivingSocial, Groupon, or other sites, check out that post. As a consumer, I love these promotions — getting half off at a favorite restaurant is hard to pass up.

I have even written a case that I plan to put in the next edition of our books — since it looks like daily deal promotion is here to stay.  I still question the strategy — which is why it makes for a great case — there is room to debate both sides.  The case made for fun discussion on the first day of class and one of my students tells me she works at a local restaurant that swears by LivingSocial coupons. I have previously questioned if a small business really wants these deal-prone consumers — because the deep discounts almost require them to spend more than the coupon or come back again for it to be a profitable promotion.

A second issue relates to the profitability of Groupon and LivingSocial — the two leaders in this space.  There is already a shakeout occurring among daily deal sites.  With such low barriers to entry, I have often wondered if anyone would really make much profit in this space.  One key is differentiation — and LivingSocial, which copied Groupon in the first place, is working at it (see: “LivingSocial Aims to Be Different from Groupon,“ BusinessWeek, September 22, 2011).  Groupon announced its own new product ideas back in March (“Are Four Words Worth $25 Billion for Groupon?” BusinessWeek, March 17, 2011), but I have not heard if these are working.  For a variety of reasons, Groupon’s IPO has been delayed.

Many U.S. grocer stores use multi-unit price promotions — for example, 4 12-packs of any Coca Cola product for $12.  This article, “At Stores, Making 5 for $5 a Bigger Draw Than 1 for $1” (New York Times, July 17, 2011) describes the practice with a variety of good examples and some interviews with managers.  While most stores allow consumers to buy fewer items at the fractional price (one 12 pack of Coke for $3 in the previous example), the promotions typically encourage consumers to stock up.  So it provides an example of how marketers can influence consumer behavior.

I also found it interesting how much retailers monitor and tweak the strategy — looking very closely at which combinations bump sales the most.  That provides a different type of example of marketing research and consumer behavior — and of course this example can also be used in pricing or sales promotion.

Just yesterday we posted “Get to Know Groupon” with a few articles about Groupon and other daily deal sites.  Then today, we get a consumer warning about these sites in “10 Things Daily Deal Sites Won’t Say” (SmartMoney, March 29, 2011).  This article brings up all kinds of ethical and strategy questions for marketers — a good supplement if you plan to talk about it in class or buy a daily deal.

Let’s get up to speed on Groupon.   I definitely missed this one.  I thought the Groupon thing was just kind of a niche idea; I thought it would never take off and hoped it wouldn’t.  We don’t need to make consumers more price sensitive – do we?  I also thought they were nuts last year for turning down a $6 billion buyout offer from Google.

What is Groupon?  Groupon is the most well-known of a variety of different “Deal-of-the-day” websites.  Groupon is now in more than 250 geographic markets around the world – with most promotions for small local firms.  Customers sign up to receive a daily e-mail with a deal like “Get $20 worth of pizza from Giovanni’s Pizza for only $10.”  If you want to buy the discount – you have to buy that day.  The retailer and Groupon typically split the $10 – about in half though that varies.  So a retailer receives $5 for a coupon that gives a customer $20 worth of pizza.  This raises a variety of interesting questions – good in-class discussions – about when this might make sense.

Well Groupon appears to be here stay—so I have a few different articles to get you up to speed.  From a teaching perspective there are two issues.  First, there are real questions about whether using Groupon makes sense for small businesses (the subject of the first three articles above).  It might make sense for a company trying to attract new customers – and confident it can retain them.  For different perspectives on this issue, see:   “Is Groupon a Good Deal for Small Business?,” (Fox Business, January 27, 2011).  And do we want to attract the deal-prone consumer — will they be loyal and profitable?  For one perspective on this issue see “Beware of Innovations from Daily-Deal Sites,” (Harvard Business Review, March 25, 2011).

On the other hand, it makes little sense to send out a deep discount coupon to your regular customers.  The first two articles above all deal with that issue.  Second, there are concerns with Groupon’s long-term marketing strategy.  With few barriers to entry, new competitors are springing up all over.  This has given small businesses buying power vis a vis Groupon and its competitors (see “Burned by Daily-Deal Craze, Small Businesses Get Savvy,” Wall Street Journal, March 24, 2011 – non-subscribers may have to click here or check out the video below).  It also naturally leads to questions about Groupon’s strategy moving forward.  With few barriers to entry, how can Groupon get a sustainable competitive advantage?  Groupon is trying – check out “Are Four Words Worth $25 Billion for Groupon?” (Bloomberg Businessweek, March 17, 2011) to read about how Groupon is trying to move ahead with a new location based strategy.

As you can imagine, Groupon could be used to discuss consumer behavior, sales promotion, retailing, and marketing strategy planning.

The World Cup is a huge sponsorship opportunity — especially in Spain.  I spent almost a year in Spain while on sabbatical a few years ago — they love their soccer.  This short (2:17) video clips might provide an international example to use when you talk about sales promotion or sponsorship  “Spain a World Cup Favorite for Ads” (CNNMoney.com).