Case 13: Groupon’s Business Model: Social and Local

Q1: How does Groupon take advantage of social networking and location technology?

Social Technology

§  Track record - selling goods and services on the INTERNET is increasingly based on social networking – friends recommending friends.

§  Companies targeting individual and their friends who are members of social networking communities such as Facebook and Twitter. Advertise their products and services through Google.

§  Personal Follow up – can follow-up with newsletters, special offer and news releases t the company

§  Best foot forward strategy – An opportunity to demonstrate stellar customer service. Can win repeat customer this way.

Location Technology

§  As Groupon armed with detailed knowledge of customers locations target special offer of location-based goods and services.

§  Information for the selling of goods or discount of coupons can be access by customer at any time and any ware using mobile apps.

§  The business earns revenue by asking people to recruit their friends and acquaintances to sign up for discount coupons to create a “critical mass” of potential customers for a local product or services.

Q2: Do you think the business model is viable? Why or why not?

In my opinion the business model is viable based on the following:

§  Inexpensive deal.

§  Ability to get more profit.

§  Currently social connectivity is proven as a platform to selling goods and services on the internet.

§  Groupon serves 500 markets in 44 countries.

§  Groupon also need to strategize the marketing and business in order to maintain their profits.

§  Groupon also need to maintain and increase competitive advantage for their products and service.