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Description: Groupon is fervently preparing for its most ambitious venture yet: the launch of a new mobile application that the company hopes will change when and how society chooses to eat, shop and play.

Source: CNN.com

Date: March 18, 2011

That’s the beauty of Groupon Now: local businesses have never really had a simple way to manage their perishable inventory, especially labor and food. Why waste those resources during slow periods when you can bring savings-savvy consumers through the doors with a highly targeted Groupon deal?”For merchants, the daily deal is like teeth whitening, and Groupon Now is like brushing your teeth. It can be an everyday thing to keep your business going,” Groupon founder and CEO Andrew Mason told Bloomberg Businessweek in an extensive interview on the new product.

The daily deals company has been on a tear recently — in fact it is the fastest growing company in history — but it faces stiff competition from companies with increasing muscle.   Read rest of story

Questions for discussion:

  • Does Groupon have a long term competitive advanatge in this market sector?
  • What do you see as the biggest strategic threat to Groupon?

26 Responses to “Groupon’s ambitious plan to change how and when we eat”

  1. Brett Quinton

    Groupon is in the best possible place a company could be in. They were the first big player in the market and have the first mover advantage. Everybody knows the Groupon name and what there business is all about. They started with the idea of a deal a day tailored to your location. They have realized that in the world of the internet, there is no such thing as a long term competitive advantage. The company has to keep moving forward and offer the next unique idea before anyone else. Google made a huge offer for Groupon because they saw the potential in the company, I think they were crazy giving up 6 billion dollars and the opportunity to become an overpaid figurehead at the Googleplex for the rest of their lives, but it appears that they are going to get about 4 times the funding through an IPO. I think that after the IPO the hostile takeover bids will begin and Groupon will be swallowed up by a much larger competitor.

  2. Oloff Dreyer

    I think Groupon will probably be the biggest player in this market but will always have competitors that are going to be willing to compete for a piece of the pie. Groupon did have the first mover advantage which is the greatest advantage to have and should continue to constantly be evolving and changing its plans so as to keep their competitive advantage in the market. The biggest threat to Groupon is probably the competition and the fact that a bigger company will innevitably take them over such as Google. Even though it is in their best interest to stick with the IPO investor I think the fact that they will eventually get taken over will always be there.

  3. Kuda

    Groupon has been in the business from around 2008 and seem to have been the first movers in catching on to this particular business model (coupon website). And the there seem to have put programs in place that make for sound and beneficial partnerships with restaurants and other companies. One that allows for service to be given even during seasons when business is low and so you draw customers in. I listened to Bloomberg News contributor Paul Kedrosky who happened to have said the business that Groupon finds itself in or even Groupon itself could just be having a shot burst in business because the threats to their business will likely then come and take their advantage away. The threat meationed was that Google, Facebook seem to be exploring the same goupon business model, something that can see then out of business. Its interesting in this case copycats would not be the issue; instead it the seasoned players that could destroy Groupons bubble.

  4. A.S.

    I believe Groupon has a short term competitive advantage in this market sector. Yes it is a concept that has never been approached before. However, it is one that can easily be replicated. Companies such as Google and Facebook may come along and manipulate Groupons business model and create their own app, in which gives users access to more features then just an “I’m bored, or I’m hungry” option. As a result, this may be the biggest threat to the company.

    The fact that they offer coupons for businesses across Canada and the U.S. tailored to the consumers location is remarkable. It is a concept that is flexible and convenient for local commerce. However, with 70 million subscribers in just North America, Groupon Now can reduce the chances of external threats and competitors and sustain its competitive advantage if they decide to go global, and expand into European and Asian markets.

  5. Katelynne Swenson

    After reading this article, the first thing I did was download their app! Unfortunately they don’t have Lethbridge 🙁 I believe that Groupon can be successful, as long as they maintain their competitive advantage and stay ahead of their competition. Their biggest threat is definitely competition. It may be hard to compete, since they have a very easy to copy business model. They must be continually adding new locations and businesses in order to stay ahead. Groupon does have the advantage of being the first big competitor, however, which means they are gaining the majority of consumers in the market. If the company is ran right, I think Groupon will be successful. People are always looking to save, and if Groupon maintains the best deals out there, they will be maintain their long term competitive advantage.

  6. Samantha.Kent

    People in today’s economy are always looking for good deals. Anywhere they can get a deal they are going to take it. Most people carry a smart phone so to be able to get deals that are available in the area on their phones is a huge advantage for the local businesses. It would result in them going out for dinner or something to do if they are in the area already. If they have to go home and check their computers for deals of the week or day, they are more likely to stay home or order in. If they are out and about the companies are more likely to get them to come. Groupon would be able to introduce people to businesses that they have never been to or know about. If someone it introduced to a new company and they enjoyed their experience they are going to tell their friends not only of the new company but also of Groupon. The word of mouth is the best form of marketing for a company and the two companies would win in this situation.

  7. Warren

    Groupon may have a jump ahead of future competition, but like the article said, their business model seems easy to replicate. It would be hard to perfect the app whether a person is urban or rural. Just like how GPS may not pick up every single location, Groupon would have a challenge in putting every single business in their app. Having deals for franchises and chain stores, which could make the location approximation easier is one thing, but how they could name all private businesses would be would be very difficult. The idea sounds great for large urban centres. If Groupon can perfect their app they could the experts in their field with the best product. This could detract from copycats that have an inferior app. The largest strategic threat could be the several competitors that already have apps. Research in Motion, Apple, Google, and Microsoft could all duplicate the app of they really wanted to. Groupon is doing great things, but they need to be careful to not get swallowed up by another large corporation.

  8. Mark McKee

    This was my first time hearing about the company Groupon. The fact is everyone likes to save money and get a good deal. They do have the first mover advantage and the “Groupon” name is worth something because of their popularity. Unfortunately, they do not have Lethbridge on their website list but I’m sure will be added in the coming months. Will they keep the competitive advantage? I don’t think so. I think their business model is easily copied and big companies like Google and Facebook or others could join the market. I like the idea of having an app that gives you daily deals. But again other companies could easily do the same. I honestly, do not see what’s keeping competition from creeping in and taking all their business. Groupon must stay on the leading edge and keep good partnerships with companies that offer these discounts. I think Groupon rejecting Google’s offer of 6 billion may be a mistake if they are overtaken in the future. Only time will tell.

  9. mike

    Groupon probably doesn’t have a long term competitive advantage. Right now they have a huge subscriber base which is probably the hardest thing to establish initially. Now that they have this group of customer base the task now will be to stay ahead of the competition. They will need to maintain customer satisfaction by leading the industry with new and innovative ways to keep them on the forefront in order to retain their wide customer base. The market that they are in seems to be easy to replicate. The main threat they would face is the threat of new entrants in to the market that could draw on their market share. Duplication would be the problem they would be facing. If the other companies don’t give customers reasons to switch from groupon, they could definitely enjoy longterm success. There is always going to be a market for people wanting to save money. Some people feel embarrassed to use coupons because they feel cheap or poor. As long as there is a healthy population of cheap Dutchmen, like myself, and other genetically predisposed frugal people, the coupon industry isn’t going anywhere soon

  10. Ashley

    This is the first time I have heard about Groupon and I think it’s a very interesting idea. People will appreciate how it is resourceful and allows for businesses to control their perishable inventory and of course to save some cash. Being the first in the market gives Groupon a competitive advantage but I don’t think this advantage will be long term. The world of apps is taking over; there is an app for almost everything, which does not stop others entering with similar ideas, if not better.
    I see the biggest strategic threat to Groupon is more competitors entering the market. Because it is such a simple idea there can easily be mimic apps that offer the same thing. In a previous comment, someone downloaded the app and realized it wasn’t offered in Lethbridge. Any company can take over the areas that have not already been taken by Groupon.

  11. J.E.

    Groupon is an app I have download for my iPhone about two weeks ago and I think it is a great idea. There really isn’t a whole lot on there for Calgary/Lethbridge area but the deals I do see are quite amazing. This is a great way for companies to get rid of excess stock and create business without the need to make a million coupons and mail them out the world. I think Groupon has a great idea and will probably be one of the bigger coupon agencies for quite a while to come. This business model is easily copied but they have the initial go at it and that is where it will help them. I have used similar things such as Hotwire.com to book hotel rooms at great discounts and I have noticed now that hotels are putting rooms up on Groupon so the more amenities and activities they can acquire the bigger and better they will get.

  12. Kim B

    As far as competitive advantages go, Groupon’s only headstart is the 70 million subscribers they already have. It was this class that we learned that in order for a company to have competitive advantage, their business model must be both unique and hard to copy. Unfortunately for groupon, their model is ridiculously easy to copy, as other company’s already have, or are well on their way to doing so. This is where the headstart on subscribers come in, as 70 million is a fairly significant number, and it will take these competitors a fair amount of time to nab a significant market share. this being said, this idea is a superb one if it can be applied to the area you live in. It is a good business idea and a good model, but groupon is going to have to add some serious value to their present company if they wish to maintain the lead on their competitors in this industry.

  13. JJ

    This article was very interesting. I had never heard of groupon to be honest. I beleive the company has potential for huge success and is quite evident with the 25 billion dollar ipo they are planning to proceed with. I would have to agree with most of the responses above in regards to the selection. Calgary and lethbridge didn’t have the kind of deals i was looking for. The idea is great but if they had a different range of deals I feel as if it would have more consumers. I can usually find what I am looking for online and at a good price but i will keep in mind that groupon might have some good deals someday.

  14. Kendra

    I do not think that Groupon has a long term competitive advantage in this market sector because it is a seemingly easy idea to replicate. Also, knowing that Google is interested, I’m sure they are already coming up with something that is better, faster, and that can link more information to the restaurants and stores near you. Groupon definitely has a leg up on the competition right now, but the businesses that they include on their application aren’t going to be exclusive with them when other companies come out with a similar business idea. Businesses want to get as much customer traffic as they can, and therefore they will take any opportunity (e.g. other Groupon-like applications) that might help their chances of enticing customers into their store. Groupon is definitely good for businesses to gain exposure, but as for Groupon maintaining it’s competitive edge-I can’t see them lasting all that much longer as a leader of this business model.

  15. AS

    Groupons ideas have the potential to be a very profitable business but the threats for competition are very high. This would be very easy to duplicate, as shown by googles interest in purchasing the company. Right now they definitely have the competitive advantage because there are no other websites like this, as far as I know. To keep this advantage when competitors come into the market they will need to make sure that there coupons for discounts are more desirable to customers as well as competitive prices for these coupons. I think there biggest strategic threat would be google. They have probably already developing something similar to this and with the power of their brand name they will not need to spend too much on marketing their idea and they will be able to gain market share easily. I think that Groupon in a very innovative idea that can be utilized by many as long as it maintains a useful data base of coupons.

  16. Jared Scott

    This is an example of the comment I made about the Zediva article. People want a bargain. The more people have access to what appears to be a discount the more they are willing to part with their hard earned cash. If companies like Groupon can stimulate the economy they better off it will be. I hope more companies take Groupon’s business model and make it more widely available.

  17. Travis Sedrovic

    Groupon is great, and will continue to grow in both regions and products and hopefully continue to help people save money. As for their long-term advantage, I believe that is dwindling. I am a member of groupon, but I also have a TeamBuy account, which is pretty much the same thing… as with anything, others will come along and you will soon have to share the marketplace. Google is a huge threat, if they want something like this, I would be afraid. My suggestion would be to sell to Google! Get out now before you get trampled on and end up without a business in the future.

  18. Chris

    At first I didn’t quite get what groupon was but it is very attractive to people who like deals. Being a student makes this attractive to us and any others who try to make ends meet. It looks attractive to parents as well who have children that say “I’m hungry” and “I’m bored.” Isn’t that what all children say quite frequently? It is also very good for businesses when they need more business like a restaurant wanting more service during the week. I do see it being a threat from companies that are way bigger like google wanting to buy it out and having a lot more power than groupon has right now. It does have a head start like with the company having 70 million users and growing. It will be neat to see if this app is the new future of commerce. And it is available in a couple days…

  19. Mikey

    I have used Groupon on my iphone and I find it useful, except you need to live in a larger city… Since Groupon is such a new company, it si easier for other entrepreneurs to come up with a similar system. It doesn’t require much for a person to contact restaurants and offer the service, setting up a web server and a database that could hold all the information. People will soon enough see the value in this kind of advertising technique and claim their piece of the pie.

    I can see Groupon bringing the kind of change that Facebook and Google brought to social/economical interaction to our communities.

  20. Asif Hirji

    I’ve never heard of Groupon before but i’m actually exited to give it a shot! I can really see myself using such an app. A major drawback would be that I could only see it’s use for large urban centers but apart from that a terrific idea. I wonder how successful they will be during their IPO launch?! Might be worth considering if it’s the way of the future 😛 What a great way to gain an advantage over people in the industry.

  21. Teigen

    I think Groupon is a great idea! Whether or not it’s model is easy to replicate or not, the fact that you can search for something to do, without having to pay full price is amazing. Nobody wants to pay full price for anything, therefore the fact that businesses are offering up deals to creative more revenue for themselves on days where they may not be generating as much profit is a good idea. One of the biggest advantages, in my opinion, of the Groupon app, is the fact that you begin to try and experience places you may not ever have because of price or simply because you have never heard of them. When it comes to restraunts, there are so many new places popping up that it is hard to keep up with them and try them all out. Groupon would allow you to use those coupons accordingly and gain new experiences of businesses!

  22. Nyle Watts

    I really think that Groupon is an excellent idea, especially if you are traveling to a different city and may not have enough of a budget to eat out or see attractions as you may have liked. It seems like it a no-brainer for businesses to offer these discounts through Groupon on these slower business days , since the main goal in any business is to generate revenue, and if this is a way to do it, then why not do it. Mind you, there will probably be other companies who will try to implement similar concepts as what Groupon is doing, but since they have already established themselves so well into the marketplace, I believe that the risks are not that overwhelming. But you never know. If Google tried to make an another offer to buy you out, it might a good idea to give it some more consideration.

  23. Dylan B

    I’ll be the first to admit that I love groupon. Every day I get emailed to me offers from calgary (the nearest groupon city, about 2 hours from here) and i wake up to more VALUE. I love value! I can honestly say that i’ve never bought a groupon deal, but i sure love reading them and knowing which businesses are cramped for customers. Which spas are dealing with no customers and which pubs have empty bar stools. Its like a solid list of all the places that could use an economic boost. Then you read the number of groupons they sold that day, and multiply it by the price and realize that its GENIUS. these companies are basically selling coupons! sure there is a discount involved, but how many people buy these deals and never use them? I love the model and I think that as of right now groupon has very little competition to worry about.

  24. naismithj

    As a student attempting to function on modest means I think that Groupon most definately has it’s place in today’s society that demands more for less as fast as it can show up! It’s like expedia for restaurants and companies in your area. I think it is an innovative way of advertising new business and tracking purchases and entertaining personal areas of interest. I have personally purchased from Groupon but have yet to use my coupon. I am however excited to try some new restaurants, pubs and stores to broaden my local shopping horizons. Support local, by helping those at home we have a much beter chance at working together to help those abroad. It’s nice to turn an everyday evening in your home city into a vacation like evening out by leaving your comfort zone and creating a groupon inspired adventure, hopefully one of many. Yeah Groupon!

  25. Rob C

    Personally I feel that this Groupon app is an interesting an innovative method of advertising that is beneficial for both the merchant and consumer. Consumer’s are informed of current discounts on eatery while merchants are able to move product on a slow day that would otherwise go to waste. This win-win situation works ideally for both as this method of advertising would also be useful for different industries as well such as the retail industry where you may want a particular product and can just type in the name of the product and the app would bring up competitive prices or deals for that brand along with alternatives. That would be amazing!

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