As a group, we have chosen to examine and report on Groupon and relevant information on the marketing strategies and efforts employed by the organization, as well as the ethics and social responsibility related to Groupon’s marketing. Groupon’s mission statement according to their letter to shareholders is “To become the operating system of local commerce. ” Groupon has stumbled and disappointed users of their services because of rapid growth.
Instead of focusing on growth, Groupon must listen to their stakeholders and improve relations with the customers-both merchants and consumers, as well as investors of the organization.
We want to evaluate the company’s objectives, goals, marketing strategy, marketing mix, as well as the ethics and social responsibility of this organization. Groupon is a Chicago based company started by a Northwestern musical prodigy, Andrew Mason. It had an IPO last November that priced the company at nearly $20 billion.
Since then, the company’s fortunes have suffered and the stock is currently valued at 40% of the IPO price.
The drop in their stock value makes sense since Groupon as a whole isn’t profitable since their U. S. division only made 12% profit, but this was with their heaving marketing and administrative costs associated with it, so in actuality we no one besides Groupon can be certain what the real profit was, there could be a possibility they suffered a loss, thus making this company intriguing on so many fronts.
According to Forbes, “Groupon is the fastest growing company in US history. ” As a result of this growth, Groupon has struggled with maintaining and developing long lasting trust by its users. Groupon states on their company webpage that the company philosophy is “we treat our customers the way we like to be treated. ” This philosophy involves providing deals that members of Groupon themselves would like to buy, no terms and conditions added into these deals, and unbelievable customer service. Further, “we want you to love Groupon.
Gotchas” and buried conditions that sour the experience are a terrible way to accomplish that goal (Groupon website). ” Judging by the fact that Groupon went public in such a short time after its inception, the goal of the organization can be seen along the lines of providing investors and shareholders with returns, in addition to allowing adventurous people the ability to try new and exciting things at a discounted rate and allowing somewhat unknown businesses the ability to market themselves and gain a new customer base through their discount service.
Groupon’s marketing department still focuses on the trends of marketing followed by startup companies. For the first year and a half Groupon heavily relied on Google Adwords, where it seemed as if every time someone would Google something there was a Groupon ad to the side which essentially turned into them having one time buyers. Groupon’s marketing efforts are not as easy to see as those of large names in business, especially the tech industry. “Groupon spent $200 million in the first quarter of this year alone on marketing (Vanity Fair 8/11). Marketing strategy is the means by which a marketing goal is to be achieved, usually characterized by a specific target market and a marketing program to reach it. Groupon’s target market is any consumer of products and services in the marketplace. Where they have struggled early on, is by offering a “deal” to everybody who receives their daily email. The problem with this is, after a while, the consumer gets bombarded with these “50-75% off deals” that they never had an interest in and never will be interested in.
Groupon then becomes spam to many consumers. They are continually working on their promotions to direct them to more specific target markets. So, unless they do make a change to their marketing strategy Groupon will have to continue to pump millions upon millions of dollars that they can attract these “one time customers” since with the way they assault customers inbox with unnecessary deals there cannot be many returning customers, and this could spell trouble for their alleged profits.
Groupon’s fast rise to success is attributed to their email marketing strategy, which sends out countless emails to its subscribers each day this method is also known as direct marketing. With Groupon growing exponentially since its inception segmentation within its email marketing program had to occur. John Becvar, Groupon’s senior director of relationship marketing helped create additional methods in which Groupon was to emplace various segments into their email marketing plan. The main purpose for Groupon is to get the consumer the best local deal possible.
With the rapid expansion of subscribers throughout the United States and the World accounting for geographical differences is vital and therefore a focus on the regional area its user came from was needed. Groupon divided its subscribers into local metro sectors initially which then was furthered by dividing the metro groups into smaller groups based on zip code (Sutton). Groupon ultimately wants to identify where its users live, work, and shop to give the best deals within their individual users operating region.
Groupon additionally segmented its email marketing by incorporating more specific deals to the users. For instance Groupon now has emails which are intended to focus on travel deals, and on same day deals. Additional efforts by Groupon to become more user specific lead them to offer more incentives for more frequent users and therefore created their loyalty program. This is a change in concept, prior to Becvar being part of Groupon all subscribers were offered the same deals no matter the usage.
Now through the rewards program users will be given additional incentives when they utilize Groupon more frequently (Sutton). Groupon first launched its rewards program as a trial in a select few cities, in 2011. As of May 2012 the rewards program was released throughout the entire United States, this is a digital rewards card which is linked to customers already existing credit card, what customer needs to do is shop at location that are on Groupon and when enough uses are acquired the customer will receive more special offers from Groupon.
This new promotional strategy is expected to invigorate Groupon’s sluggish revenue intake, while using the trial period as a small sample size CEO Andrew Mason states “Though the preliminary dataset is small, pilot results show that Groupon Rewards customers are more loyal than other customers” (Raby). The big problem with this Groupon rewards program is that they have failed to meet any of the loyalty program key elements. For starters Groupon failed to create a personal relationship since their customers are forced to shop at stores that are listed on Groupon’s website, there is no ongoing engagement instead ll their system does is tallies up the totals and no one truly knows when any additional rewards will be received. I believe the biggest element they have missed is the in house engagement element, since Groupon customers cannot actually see how many points they have racked up so far, which simply shows that Groupon notices what other companies are doing but fails to implement these good ideas properly. Groupon uses the marketing mix of product, price, promotion, and place very effectively.
The product they offer is a daily deal that they have negotiated with merchants to provide their customers with an option to purchase a good or service at a perceived bargain. All a person has to do is to set up an account with Groupon and the deals will start popping up in your daily inbox. You can choose to purchase the deal or pass based on whether or not the product or service interests you. The price that Groupon uses to entice consumers to purchase varies based on the deal they have negotiated with the merchant.
One of the most successful Groupons that we have seen was for $25 you receive a $50 giftcard to the Gap. Many people shop at Gap and it was a cheap way for them to market and get people in their stores by teaming up with Groupon. Gap’s goal is for consumers to get in the store and then purchase more than what the Groupon offered. For all deals, the price is not the same, as it could not be possible with the amount of different products and services offered through Groupon.
However, they do present the prices and the percentage that the customer will save by taking advantage of the offer. The price and percentage saved is made known on the list page so that the customer does not have to be enticed to click the deal page to know how much they could save. This is an interesting strategy because in some cases seeing the price alone may convince an individual to look for further information, such as what the product or service actually is. The promotion they use is a daily deal in your inbox.
They claim to give consumers a bargain on some product they use. This is a perfect example of the concept of customer relationship marketing. Upon signing up for Groupon’s service, you are prompted to submit information such as name, email address, location. This helps Groupon use a database method to deliver relevant information to all types of users. For example, when the daily deal is delivered to your email, it will be relevant to any purchases you may have made through Groupon in the past in addition to the location information.
Another form of Groupon’s customer relationship promotion is through their mobile application. By using GPS location services, a notification from the application will present the new deals in the nearby area as they become available. By doing this, Groupon can assure their customers that they are constantly working to provide deals that will be of use to them and communicate those deals in an appropriate manner. Groupon continues to use marketing and advertising at events, on billboards and through social media to promote the brand. The place is through the World Wide Web.
Groupon is a phenomenon that has prospered in these tough economic times. The success of Groupon has been amplified so far to so many individuals through the mobile application that is available to any individual with a smart phone. The application is free and provides all the perks to users that they will need to find local deals based on GPS or by a searchable location. People are more likely to consume and open their wallets if they feel they are getting a deal. Further, Groupon’s convenience as a daily email makes consuming as easy as ever.
You don’t even have to go anywhere you can purchase your Groupon right on your cell phone and use it at whatever time you choose. Place is as crucial and accessible as ever. In the early days of Groupon and even today, we see efforts such as building credibility, establishing/maintaining unique identity, and enhancing reputation, informing/reminding customers (both individuals purchasing the Groupons and the businesses selling the Groupons) about the benefits that are provided by the use of service, and the continuing efforts to market additional products to existing customers. StartupNation) They also depend on a strategy of marketing overlooked by many, which at times is the most effective – word of mouth. According to Seth Godin, this method is most useful because there is no room in the market for the entrance and takeover of a single company, instead one must work to delight a small segment of the population and allow these customers to act as the marketing department. (Seth’s Blog) Groupon is a remarkable story of growth, struggles, and hopefully for the city of Chicago, a lasting legacy of success and innovation.
This company has the potential to change the way commerce is conducted and influence the lives of millions of people. Let’s hope they focus on their stakeholders instead of rapid expansion in the years to come. Groupons downfall may result form the fact that the initial investors who got a discount premium on the stock which they turnaround and sell in the matter of next thirty minutes of them going public since any seasoned investor will tell you that Groupon stock is not something you want to own but merely bet it a the IPO price and flip it in a New York minute which is what the initial investors did.
Folks do not get fooled by Groupons lovely exterior look and their somewhat clever email coupon deals because in reality the company is a giant mess on the inside and their stock carries massive loads of risk you as small investor doesn’t need, since Groupon key investors like Eric Lefkofsky who pulled out 400 million, Brad Keywell who pulled out 156 million and even the CEO has removed 10 million, so that’s nearly 600 million dollars that is gone from Groupon, these could be signs that Groupon is in a great deal of trouble. Henry Boldget who is a former Wall Street analyst said, “I wouldn’t touch Groupon IPO with a 50-foot pole. ”
Cite this Marketing Strategies and Efforts Employed by the Organization Research
Marketing Strategies and Efforts Employed by the Organization Research. (2016, Oct 25). Retrieved from https://graduateway.com/groupon/