Groupon Case analysis free essay sample

Groupon, a new internet coupon sensation, was formed in Chicago to gain exposure to new businesses through discounted membership deals and has been on the rise ever since. This particular case study attempts to elaborate on the success of Groupon and how it works. The e ­coupon was designed to help business owners appeal to new prospective consumers by advertising group discounts on products and services. There are a range of businesses that are advertised on the website. One can find discounts on spa packages, concert tickets, dinner and dessert specials, and more. The way it works is, the business owner makes a deal with the website by offering a discount on a product or service and tells how much they are willing to accept for it and the amount they’re willing to give away. Then, Groupon advertises the offer for a limited time and receives a finder’s fee once consumers purchase the deals. We will write a custom essay sample on Groupon Case analysis or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The business has full control over the minimum and maximum number of deals they’re willing to offer. If the deal doesn’t appeal to consumers then there is no financial loss to the business owner. The intention of the business owner is not to gain a lot of profit from the deals made? rather the intent is to drive traffic to the business once the deal is over. Moreover, the benefit of Groupon to the producer comes after the deal is over and the benefit of Groupon for the consumer comes while the deal is still going on. It is a way for consumers to not only receive great deals but also establishes buzz marketing and word of mouth. It is very beneficial for those who invest in Groupon to get their services out in the public and gain a wider target market. Table 1 shows comparison of porter’s 5 competitive forces before and after Gro upon Table 1: Porter’s 5 forces pre ­groupon and post groupon Porters Competitive forces Pre ­Groupon Post Groupon Threat of new entrants Low Not too many competitors Medium First entrant advantage not too many survived the competition Bargaining power of suppliers Low industry leader not too Medium many although it increased there are not too many choices for suppliers to make choices any bargains other than groupon Bargaining power of Low High buyers switching costs for buyer is very low or NIL Threat of substitute products Low first in business Medium same as suppliers Industry Competitors Low High Market Size Small Large Market Growth Medium  ­ People did not understand the groupon business Rapid Business Strategy Focus 1. Differentiation 2. Cost leadership First Mover Advantage High Medium/Low IT infrastructure Rare,Valuable,Imitable Not rare,Valuable,Imitable Information Repository Rare,Valuable Rare,Valuable Technology Skills IT management skills Medium Rare,Valuable,Imitable Medium Rare,Valuable,Imitable Relationship skills very rare,valuable,Difficult to Imitate very rare,valuable,Difficult to Imitate