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.