Description: Groupon has had huge growth and success in the area of marketing businesses. Is there any downside in using Groupon for small business?
Source: Msnbc.com
Date: November 21/2011
Questions:
- Is Groupon something that can benefit all businesses? Why? Or Why not?
2. What criteria would you use as a business manager in trying to decide to utilize Groupon?
Joseph Walls
It can defiantly benefit from Groupon, however it can be very hard since they take a large cut of the sales. It does however work really well to make sure that you get your name out there more. It’s not something that you can utilize in the hopes to make a profit of it. It does however allow you to reach a large audience so if you have a product that you know if someone tried it they will come back for it again and pay full price in the future it does make sense.
Jillian K
This video clearly states that Groupon is not something that can benefit all businesses and that specifically small businesses have been seen to suffer at its hands. Like any marketing tool, Groupon comes at a cost and business owners must do careful research to determine whether or not the benefits will outweigh the cost. The primary question I believe a company needs to ask themselves is: do we have the resources to deal with a major influx of business in a calm and professional fashion? Will it require the hiring of more staff? A facility expansion? Obviously it will be difficult for a company to benefit from the new business acquired if they are not prepared to process it. Secondly, is the discount arranged in a way that will allow those who take advantage of it to make up for the loss in revenue for those never show up? How is the promotion being timed in comparison to the business cycles already in place? I think the owner of Lasher was a great example of a business person who really analyzed and came to understand the process and was able to use it to his gain. Business owners who are unable to do this are putting their companies at risk without a doubt.
Meagan
Groupon doesn’t always benefit all companies; Some Groupon customers will only go once or twice to get the discount but then never come back. And this will cause some companies to lose money. When a Groupon customer is unhappy they can cause a lot of prospective customers to never try the company that is said to not be worth trying. Groupon customers can also take up all the space for current customers and this can cause current loyal customers to go to different customers and therefore lose their business to those customers that would come back and lead other people to the company but instead you are getting Groupon customers that may never come back. There are still some advantages about Groupon however. This can bring customers to companies from all over the world and some customers liked it so much that they kept coming back and became loyal customers. Also the customers are still getting a discount yet the company can still make money from it, keeping both the consumer and the supplier happy. Although bigger companies tend to do better than smaller companies, Groupon is still a benefit to a lot of companies, but it can also be a problem for those smaller companies that can’t take the chances of having a loss.
Rayelle D
As presented in this video, Groupon will not benefit all companies. Companies will only see benefits if they do it correctly. A drastic discount will do nothing for them as then you will get the customers who are “cheap” and will most likely be a one-time customer who will most often not discuss the experience with friends and family. If you give a smaller, but still reasonable discount, this will attract a reasonable amount of new customers who will then become long-term customers because after the one-time discount the regular price will not be so drastic that they cannot handle this. If the service that you are providing is up to a good standard you new customers will then share this, which will in turn help you as more word of mouth marketing will take place at no extra cost to the company. Win-win. I don’t know a lot about Groupon’s services but it seems, part of the key to being successful is following their guidelines.
Matt B
Groupon is something that can’t benefit all businesses. There are many reasons why its not successful with all businesses. One reason why it doesn’t is because there are some companies that do well as it is without bringing in new customers. They are able to stay successful with the regular appointments/ customers they have already. The business may not be able to expand in order to keep it profitable and moving smoothly. As a business manager trying to utilize Groupon, there are many things I would need to take into consideration. First would be am I going to be hurting my reputation with my regular customers if adding groupon. Every company has a certain capacity of what they can do and you don’t want to be overwhelmed and over booked. As well if I was a small business I would have to take into consideration of how many of the Groupon customers would/could be no shows, because that’s lost profit if that happens. If I utilized Groupon I would need to take into consideration of adding more staff members. As well as recognizing if it’s still going to be making me money if I’m bringing more staff in, having to deal with more salary expenses.
Hassan Al Sarrar
Well it is difficult to say whether it is beneficial or not for all business or some because there is two side to this situation. First, Groupon will require both a fee to the subscription and the interested business to subscribe should consider offering a discount in top of that. This shows a loss from all aspect of that business income statement which is lower sales and more expenses. Second, despite the fact that the business is losing money, Groupon is offering them the opportunity to be more apparent to more customers and the strategy of a discount is making them more attractive than others to the customers. The fake downfall of fewer sales might be their best decision where more customers are attracted and their revenues are double as we saw in the video or even trebled. It is for sure important for the manager to be careful when and how to do the subscription. For example, they could match the expiration on the subscription by the least time of their sales of the year. And make sure to have enough capacity in the business in term in inventory or stocks and staff in order to handle the expansion of the business due to more customers.
Pulkit Arora
There is no straight answer in deciding whether groupon can benefit all businesses. There are a couple of factors contributing to whether it is beneficial or not. The first being how much of a discount the merchant is offering to its customers. For example, the laser removal groupon offered a discount that was up to ninety five percent off which is great for the customer but horrible for the merchant. With such a steep discount, the staff members cannot handle the amount of customers that are going to go into the laser removal store. But on the other side, the pedal bike water business made triple the amount of money because it offered a fifty percent discount, which is beneficial to both parties, not just the customer. The second factor is the size of the business. Small to medium size business would most likely incur losses because of groupon because of the high demand and low staff and products. Some of the major criteria that a business manager has to take into consideration is when the groupon is ‘made’, how much more staff is needed and at what times. For restaurant businesses it easier to have a beneficial groupon because they have so many other things that are offered rather than just their groupon.
B Schnell3
I think it could be argued that any business can benefit from groupon although it is not a decision to be taken lightly. As shown in the video, without planning and forecasting the possible scenarios that exist a business could be taken by surprise. Service industries in particular (laser skin care) may have a more difficult time creating a groupon discount that will increase business without flooding them with new costs. For a business to offer services at a loss over a hot internet site without thinking about all the possible outcomes is crazy. Its almost like the plot of a movie I saw once, start up company makes it big, bigger, too big to keep up! On second thought, it may have been computer commercial. lol
If I were considering using groupon, I would consider my ability to serve a drastic increase in customers, and the increased fixed and variable costs that would be associated with it. Further, a good point shown in the video, will these new customers be long or short term. Sounds like working with groupon reps would help to.
Andi Watts
As outlined by the video, Groupon clearly isn’t a fit for all businesses, especially small to medium sized ones and baby businesses as well. If a smaller business were to discount their services at a higher than average rate, they would have neither the backup of relying on selling other products or services to counter the unavoidable losses nor would they have they booming demand of a vast clientele to drive demand up to counter the aggressive discounting. In order to utilize Groupon to work for you, you would have to factor in many things. A business would have to observe their customer basis in order to judge of they can get the needed amount of feedback to make such an endeavour possible, they would have to consider their demographic and see if the theoretical coupon would flourish or bust, they would have to time the Groupon effectively to avoid setting themselves up for disaster by a mass influx at one point or a dead period in their business, and most essentially, they would mainly just have to step back and really consider if utilizing Groupon is right for their business in general; one size fits all isn’t always a good thing.
brett pudwell
The idea of group coupon sites like groupon and living social are genius. The idea of being able to offer cheaper prices due to the massive volume of business brought in works to benefit both parties. This video talks about how groupon brought in so much business for companies that they couldn’t handle it all. This is the goal to a certain point of advertising in general. Obviously there is some common sense required to not bight off more than you can chew but that is just business sense. I have used groupon before and and it worked just fine for me. The idea that the restaurant owner seemed to have of upselling customers seems to be where groupon is headed, as most deals I see now only would pay for a part of the product, and I would end of having to fork over the rest. Groupon is now a multi billion dollar company so obviously they are doing a lot of right things. I think if an advertising companies main complaint is that they are bringing their clients too much business, they are doing alright.
Moire Hogg
There is potential for Groupon to have a real benefit for most business, but not all. There are some industries where using this advertising tactic simply would not work because of the type of service offered or who the target market is. For example, a commercial real estate company would not likely want to use this form of advertising.
For retailers and service providers, Groupon can work provided the offer to potential customers is calculated properly in order to realize profit and gain regular customers. The example in the story with the laser salon was unfortunate. The offer worked to bring people in but it was the wrong offer for the salon. The discount was too high and did not include a smaller attractive discount on the other products sold at the salon. It would seem the salon could have heeded more of the council given by the Groupon account manager.
On the other hand, the manager at the restaurant followed the guidance given fro Groupon and was more diligent in making sure the offer was economical with the given discount. When the Groupon customer was at the restaurant they did a better job of up selling with other products.
If I were managing a business where Groupon could be utilized, I would have to consider where the economy of scale is for my business. I would not want to work harder and realize less profit. Considerations for the offer would include our capacity to provide our product/service, size of the discount to keep the offer economical, what other offer could be included to sell other products/services we provide.
Mark
clearly, as the video demonstrated, groupon is not viable for every business. I don’t believe it has so much to do with the size of the business that makes the fit for groupon, but more the type of business you are operating as.
For instance, if you are operating the type of business that has limited capacity or you see your clients by appointment groupon may not be the wise choice, in that business is too overwhelmed by discount customers. If you are operating a business that allows for customers to shop at thier own convenience, providing you have the space, inventory, and the means to upsell groupon may be a good choice to develop more traffic.
The same scenerio applies to online companies: do you, or do you not have the capacity to provide service to your customers (discount cust and norm cust.) at a profit with the sudden increase in discount customers?
Yanmei Sun
Personally I like the idea of Groupon because it helped me saved some money. I had reserved a hotel and a restauraunt this summer for travelling with my friends and it saved me about 40%.However, I believe that every thing has two sides,Groupon something that can benefit some businesses but not all of them. According to the video and some information that I found online, I sum up the advantages and challenges of Groupon for businesses are as follow.
Advantages:1)it is easier to attract new customers because of the lowest price.2) it is a good way to build relationships with clients such as give them more coupons.3)use the least money for advertising,save money and time.
Challenges:1)the perfection of website security services;2)because of the fierce competition.
Mallory
I think that Groupon is a great way to attract and let customers know about your business. It is a good tool to use for promotions. Even though it benefits the business this way it ends up causeing a lot of problems. Such as it brings in soo many “potential” customers that it ends up creating frustration for current clients who can’t book an appointment till months away because of other people coming to use the promotion on Groupon. Like with Laser Geneie even though it attacts “potential” clients, more than 50% never buy any of the products or ever return, while their loyal customers are finding somewhere else to go because of the ridiculous appointment wait which also hits the business hard. Also Groupon takes a big chunk out of the sales which doesn’t end up benefiting the business either and causing more problems. I think the only way you could use Groupon is if you’re a big business that has many outlets and personel to fill the rush of “potential” clients so that they can use the promotion while the business still keeps their loyal customers happy with not so long appointment waits.
Debbie Kennedy
Groupon is something I am considering. I have an old phone and I am thinking of upgrading it so I can get the app for groupon after hearing about it. I think it can benefit most businesses as long as the suggestions from the Groupon representatives are taken. The Laser cosmetic business lost out because they didn’t take the suggestions given to them and I am sure if they had certain criteria within the discount it would have worked better for them. The laser business should have done some number crunching and considered all aspects, for example the additional staff that was required, and the number of appointments they could take in a day. The discount of 95% was a little extreme and a smaller discount should have been given after taking all things into consideration. High end service businesses, such as the laser business, would have to be very careful in signing up for such an endeavor and if they decide to go with Groupon, plan plan plan and number crunch is key. I believe it can benefit most businesses as long as they plan carefully and take the advise of the Groupon representatives. The restaurant was skeptal, but did some planning and it came out winning in the end because it did it’s planning. With Groupon you may get first time customers as well, they may or may not come back, but they will tell someone of their experience and give you new business.
The criteria I would use as a business manager is giving a discount that is reasonable taking into consideration any costs that would be incurred due to the possible influx of business. Keeping the discount period within downtimes is a criteria I would consider depending on the type of business. I don’t think there is any downside to using Groupon for any business as long as proper planning are in place.
Debbie Kennedy
Groupon is something I am considering. I have an old phone and I am thinking of upgrading it so I can get the app for groupon after hearing about it. I think it can benefit most businesses as long as the suggestions from the Groupon representatives are taken. The Laser cosmetic business lost out because they didn’t take the suggestions given to them and I am sure if they had certain criteria within the discount it would have worked better for them. The laser business should have done some number crunching and considered all aspects, for example the additional staff that was required, and the number of appointments they could take in a day. The discount of 95% was a little extreme and a smaller discount should have been given after taking all things into consideration. High end service businesses, such as the laser business, would have to be very careful in signing up for such an endeavor and if they decide to go with Groupon, plan plan plan and number crunch is key. I believe it can benefit most businesses as long as they plan carefully and take the advise of the Groupon representatives. The restaurant was skeptal, but did some planning and it came out winning in the end because it did it’s planning. With Groupon you may get first time customers as well, they may or may not come back, but they will tell someone of their experience and give you new business.
The criteria I would use as a business manager is giving a discount that is reasonable taking into consideration any costs that would be incurred due to the possible influx of business. Keeping the discount period within downtimes is a criteria I would consider depending on the type of business. I don’t think there is any downside to using Groupon for any business as long as proper planning are in place. I know I will be giving business to the phone company whose phone I will be buying. I don’t have the time to look for and cut out coupons and using the internet for signing up for deals is a quick and easy way to take advantage of discounts and save me money.