Emilio M. Perez MKTG 360 Prof. Sauber Groupon 1. An understanding of consumer behavior helped Groupon grow from 400 subscribers in Chicago in 2008 to 60 million subscribers in 40 countries today by developing the concept of making offers that are only carried out if enough people commit to participate in them. Groupon’s simple business model offers subscribers at least one deal in their city each day, but the coupon is only valid if a certain number of subscribers sign up for this deal. 2. The Groupon Promise is that any customer can return a Groupon, no questions asked, if they feel like Groupon has let them down.
The Groupon promise affects a consumer’s perceived risk and cognitive dissonance by allowing the customer to feel as if there is no risk when purchasing a Groupon. The customer is even able to return the Groupon if they have already used it and were not satisfied. This allows a subscriber to purchase the Groupons without the worry of wasting money. 3. The five-stage purchase decision process for a typical Groupon user experiences: problem recognition, information search, alternative evaluation, purchase decision, and evaluation.
Problem recognition is created by triggers that present consumers with an opportunity to do something that they wouldn’t normally do. Information search may occur due to a previous experience with the merchant making an offer or a conversation with family and friends regarding a product or service. The alternative evaluation stage is when the consumer focuses on the price as being the most important evaluative criteria. Then, there is the purchase decision stage that is unique to Groupon, in which a purchase is made online and then confirmed when the deals tip.
Finally, the consumer will evaluate the purchase by comparing their experience with their expectations to determine if they are satisfied or dissatisfied. 4. The possible psychological and sociological influences on the Groupon consumer purchase decision process are the effects of the recession, the Groupon demographic, and the personalization of deals for subscribers. The recession has increased the importance of spending money wisely, in which people whom are attracted to deals are also attracted to Groupon.
The typical Groupon user is an 18 to 34 year old woman, whom relies heavily on social media such as e-mail and smartphone apps. This works out well for Groupon because the whole concept relies on the use of those social media channels. Also, Groupon is able to use variables such as, gender, location, and buying history to match deals with the customers. The combination of all of these influences allows Groupon to provide offers that are best suited for the respected customer, which is beneficial to the customer and the vendor. . The challenges that Groupon face in the future are the use of the coupon, managing the growth, and the extraordinary level of competition. The actions I would recommend related to each challenge are to possibly create more coupons that consist of buying things at full price and receiving an item or service free. This will promote more full price products n services, also this could ensure returning customers to receive that free product or service at a future date.
I feel this approach could create a higher percentage for returning customers and alleviate the fear of customers only purchasing at discounted rates. To help manage the growth that Groupon is experiencing, the company may want to look into hiring marketing consultants for the newly entered country to help the company understand the spending habits faster than they would on their own. Also, employing local people to form a research and development team could help Groupon understand the differences as well as having concrete evidence to support their international buying behavior theories.
Finally I feel, in order to address the issue of the level of competition, Groupon could approach several merchants that are in the same area and attempt to create a coupon that includes both services or products into a “package coupon”. This could include dinner and a movie type combination, but involving various vendors with a variety of combination coupons. I feel this type of advertising would be difficult for one company to replicate.
