Groupon Company Analysis: Daily Deal or Lasting Success?

Synopsis

The case under analysis introduces a company that has become a symbol of success, hope, achievement, and benefits out of nothing. It is the story of Groupon, one of the most popular discount services around the whole globe, its success, and the reasons why some challenges may still bother the company. Groupon was formed by Andrew Mason and made its first legal deal in 2008. It was created on the basis of the company ThePoint created by the same person two years earlier.

ThePoint was the result of Mason’s desire to activate an organization that could become a crucial tool in order to raise money for different causes. The main function of this organization was to gather money or signatures for a particular plan that could be implemented. Still, the point was only an abstract idea.

The focus was absent. Mason tried to make deals with a number of merchants and offer consumers discounts. A lot of people won from this idea: customers got access to cheaper services, merchants benefited from market exposure, and Mason created a company that connected merchants and consumers and used coupons offered in groups.

In 2008, Groupon was officially organized and made its first deal with the Motel Bar, offering two pizzas for the price of one. It was new, attractive, and cheaper than usual. The results were impressive, indeed: in one year and a half, the worth of Group was about $1 billion. In 2010, Groupon cooperated with 250 markets worldwide. More than 35 million users were registered. Unfortunately, the company’s fast growth was not as successful as it seemed to be.

The chosen business model based on the necessity of customer acquisition due to the existing high competition and low services was considered to be anything but successful. The development of local business became a serious problem that had to be solved within a short period of time.

In addition, “merchants were not completely at ease with the general model, now utilized by other deal providers, citing the heavy discounts required and low repeat rates from customers as their two biggest concerns” (Falcone, Halbruner, Fogarty, and Vincelette 11-3).

In spite of the fact that a number of goals have been identified (to increase customer and merchant base, use the current technological progress, think about additional partnerships, and focus on new product implementation), all of them sounded too general. The idea was created, but it was without the necessary supportive means. Therefore, the company has survived and continues growing and offering people more interesting deals.

Peculiarities

Resources

Intangible sources

• Brand name (Groupon);
• Mobile software platform;
• No definite physical inventory
• Reputation
• Relations with customers
• Respect among merchants

Tangible resources

• Management team
• Human capital
• Stock of technology
• Financial resources
• Coordinating systems
• Consumer demand

Capabilities

• Employees motivation
• Knowledge improvement
• Hyper location
• Effective promotion of its brand name
• Unbelievable subscriber acquisition
• Effective data analytics
• Service support of IT
• Strategic management
• Communication with consumers around the whole world
• Daily deal marketing
• Innovative technology
• Digital technology

Core Competencies

• Brand name (non-suitable type)
• Consumer acquisition (costly-to-imitate type)
• Worldwide access to the services (rare type)
• Consumer-merchant centricity (valuable type)

Findings on Fact with Justifications

Finding of fact #1

Marketing is one of the central spheres in Groupon organization with its necessities to take care of distribution services and abilities and improvement of the customer base. What can be done by the Groupon representatives in order to attract more people and create more contracts between merchants and consumers?

In the case under consideration, the authors admit that marketing strategies offered by Groupon are powerful indeed. The company wants to create a solid customer base and be able to distribute its services around the whole world using the Internet. The company participated in different TV shows and made contracts with different organizations online.

In addition, in order to ease communication with customers, Groupon supported a mobile application since 2010 (Falcone et al. 11-16). In spite of the fact that the success of the company was magnificent, indeed, it still faces certain challenges and is in need of interesting fresh ideas and recommendations. Certain improvements of work with customers can be offered.

1. It is possible to focus on some concrete facts about customers (age, gender, and several preferences) and offer the deals, which are more appropriate for a customer. In other words, Groupon may collect more data about its customers in order to be able to offer services accordingly. For example, young men under 18 are hardly interested in some puppet shows, which will be more appropriate for mothers, who are eager to entertain their children and get a solid discount on it.
2. Another interesting idea is to exclude customers with business-oriented goals only. Groupon is a company that helps ordinary people to get extraordinary discounts for a number of events, services, and products. Business and pleasure are the two inseparable things, still, it is wrong to promote business within the frames of another business because one of them will certainly fail. So, if Groupon wants to save its leading positions, it is very necessary to take care of each customer, investigate the initial purposes of each person, and not to lose reputation gained in several years.
3. Finally, it is possible for Groupon to think about the further development of customer services, taking into consideration the current technological progress and combine several discounts at the same time. For example, it is possible to offer an Italian customer to enjoy the discount of a new European hotel along with the discount for an air ticket. So that a person who is eager to enjoy a travel can win several items at the same time, in this case, the company gets more chances to get a customer, offer several deals, and make its services wider.

Anyway, all these recommendations are based on the idea of learning better its customers and consider their personal information with their possibilities. This idea should also attract the attention of more merchants and make them able to offer their services.

Finding of fact #2

Groupon faces a challenge to follow data circulation and adopt appropriate information technologies. How is it possible for Groupon to filter information and avoid the effects of harmful programs and false facts?

Falcone et al. (2015) underline that the current technology platform enhances communication and provides “management and merchant partners the ability to track deal performance and analytics for demographic data and capacity” (11-15). However, this system may also be improved taken into consideration the following recommendations.

1. The promotion of feedback platform will help business partners and customers to increase the quality of services and incomes. People can share their emotions, offer new ideas, and inform the company about the most desirable discounts they want to get. Groupon needs to know more about the services in demand to help people achieve their cherished dreams and provide them with a chance to enjoy the discount. One of the first bases of the company is to take care of its customers and offer the best opportunities. The development of communication between customers and Groupon’s managers should not be too expensive, still, its benefits could be priceless.
2. It also necessary for Groupon to block “undesirable” customers and avoid the involvement of “business” to the company. The promotion of such a filtering mechanism should help to save time and choose only the most appropriate clients. This kind of filtration proves that Groupon does not want to earn money only. This step will prove that the company really appreciates people’s choices and wants to focus on human qualities but not business needs.
3. Finally, filtration should help to create long-term relations with customers. It is not only enough to attract the attention of a person and offer one deal. It is more convenient for the company to find the people who are ready to use the discounts on a regular basis. This is why it is possible to allow people making several deals and get one more discount for the already existing discount. Such an opportunity should be more interesting to people who want to save their money.

Finding of fact #3

Re-structuring is one more step that Groupon likes to take from time to time. The authors inform that Groupon is the company that does not want to “measure itself in conventional ways” (Falcone et al. 11-11). However, sometimes, standards are crucial for organization development. How should Groupon consider the importance of the standards and stay unique at the same time from a human resource point of view? The list of the following ideas may be taken into account.

1. The number and quality of employees should matter. It is possible to hire people from different parts of the world and use their cultural background to understand what kind of discounts may be interesting for different societies. There is no necessity to hire as many people as possible and provide all of them with a number of priorities. It seems to be enough to hire several people, improve their technological skills, and use their knowledge about different cultures and preferences. Discounts have to be in demand all the time, and cultural diversity has to be the factor that does matter.
2. Re-structuring of the company should be supported by each member of a team. In other words, it is better to spend more time on this process but take into consideration the ideas of all members neglecting their duties and practice. For example, to introduce a better service and make a coupon more attractive, it is necessary to consider the opinions of a consumer, IT developer, copywriter, designer, manager, etc. to see what aspects may be improved on the basis of the already existing service.
3. Finally, all standards have to be as simple as possible. Each employee should know his/her duties and some general facts about the company. It is not obligatory to create too complicated schemes. Sometimes, the secret of success lies in the simplicity of the structure. For example, the idea is that Groupon has to consider the demands of its consumers on the basis of feedbacks left. It is not obligatory to think about the improvements of the already developed IT system and spend much money on technological improvements. It is possible to make the completion of the task simpler – to hire a new person, who offers some new approach to the analysis of the information. In other words, though it sounds too cruel, it is sometimes more beneficial for a company to change a person, not the technology. This is why sometimes, when a change is necessary, the company’s leaders should put their needs in the first place and replace people who have already demonstrated all their skills and ideas, with those who are ready to become the necessary fresh air for the company. Of course, such type of replacement should be provided only after special questionnaires or tests according to which worth of a worker can be fully estimated.

In general, Groupon has already demonstrated how the company may be created, developed, and survived the challenges of the innovations. People always have something new to be fascinated with, and such companies like Groupon have to be able to consider the innovations along with customers’ demands and expectations and IT possibilities. Restructuring, filtering, and improving customers’ databases are not the only recommendations that can be given to the company. Still, they are really effective and cannot be neglected.

Works Cited

Falcone, Nick, Halbruner, Eric, Fogarty, Ellie, and Vincelette, Joyce. “Groupon, Inc.: Daily Deal or Lasting Success?” Strategic Management and Business Policy: Globalization, Innovation and Sustainability. Ed. Thomas Wheelen, David Hunger, Alan Hoffman, and Charles Bamford 14^th ed. Manson, OH: Prentice Hall, 2014. 11-1-11-19. Print.