Business is not booming; well, not for everyone like it used to do because of the downwind spiral direction the economy has been heading. Layoffs, steeper borrowing rates, and stagnant unemployment rates across the nation have all been outcomes of the recession. Purchasing power of the consumer has been impaired. Thus, consumer spending has been retracted. Businesses have gone belly up; those still existing need to cover their fixed and variable costs. They still compete to gain customers patronage and will do so at any extent (capitalism is great!). Now thanks to the incredible concept of Groupon businesses can utilize the power of social media to promote their services or products.
The way Groupon works is that companies enlist services or items on the site that will be subject to a discount (coupon) if and only if a quota—the minimum number of interested individuals as desired by the company—is met. Consumers who are aware of this discount and sign up will be able to “re-promote” this coupon to other consumers like friends or families through the use of available social media tools like facebook, twitter, or digg. Once the minimum number of people signup, the discount is then validated and the offer stands. The collective bargaining idea of groupon is wonderful and can be very beneficial to a company. This idea is brilliant and I often relate it to that of the bidding site that charges consumers for bids and allows them to win auctions for items with relatively high MSRP prices for unbelievable prices. Click here to buy consumer electronics for dirt cheap! It is highly legit and scam-free!Surprisingly, not all deals that are offered through groupon’s site generate profits for the businesses. According to this article, small businesses can gain exposure from it as they are featured and individuals help “re-promote”, but only about two-thirds redeem profits. Consumers who are sensitive to price, given the economy of today, only participate to cease the deals and do not end up being repeat customers. In my own honest and personal opinion, I feel these small businesses should capitalize on using groupon as only an initial means on exposing their businesses and should increase awareness through additional tools of online social media. See my previous blog entry on running a successful social media campaign.
Would you say Groupon’s approach is insufficient and should offer more? Or the businesses just bank too heavily on groupon’s model? Should they enlist on other groupon-like sites to better their chances of making a sale and offer more discounts? How much of a discount can they even afford to give?...And how frequent?
This is capitalism at its best; cut throat competition. The consumers ultimately make the final decision—to buy or not to buy. Remember to shop wisely my friends and get more bang for your buck!
